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Document of The World Bank
FOR OFFICIAL USE ONLY
Report No: 27642-CE
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED GRANT
IN THE AMOUNT OF SDR 34.2 MILLION (US$5 1 .O MILLION EQUIVALENT)
TO THE
DEMOCRATIC SOCIALIST REPUBLIC OF S R I LANKA
FOR A
COMMUNITY DEVELOPMENT AND LIVELIHOOD IMPROVEMENT “GEMI DIRIYA” PROJECT
IN SUPPORT OF THE FIRST PHASE OF THE COMMUNITY DEVELOPMENT AND LIVELIHOOD IMPROVEMENT “GEMI DIRIYA ” PROGRAM
March 5,2004
Rural Development Sector Unit South Asia Regional Office
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization.
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ADB AG A&M APL BOD CA CAS CBO cc CDD CEO CF COM CPAR DFT DrFT DS EA EMF EO1 FA0 FMR FMS GDF GND GPN GTZ GOSL HEIS ICB ICTAD IEC IDA IFAD
CURRENCY EQUIVALENTS
(Exchange Rate Effective February 23,2004)
Currency Unit = Sri Lankan Rupees (Rs.) Rs. 1.00 = US$O.lO US$l.OO = Rs. 98.88
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS
Asian Development Bank Auditor General Appraisal and Monitoring Adaptable Program Loan Board o f Directors Chartered Accountant Country Assistance Strategy Community Based Organization Cluster Committee Community-Driven Development Chief Executive Officer Community Facilitator Community Operational Manual Country Procurement Assessment Review Divisional Facilitation Team District Facilitation Team Divisional Secretary Environmental Assessment Environmental Management Framework Expression o f Interest Food and Agriculture Organization Financial Management Report Financial Management System Gemi Diriya Foundation Grama Niladhari Division General Procurement Notice Deutsche Gesellschaft fur Technische Zusammenarbeit Government of Sr i Lanka Household Expenditure and Income Survey Intemational Competitive Bidding Institute o f Construction, Training & Development Infomation, Education & Communication Intemational Development Association Intemational Fund for Agricultural development
IPSAS JBIC KFW L S MALS MDGs MIS ML&E MRE MRRP MS NCB NGO O&M PAD PC PIP PRA PRSP PS RFP SA SG so SOE SPC TOR UNDP VDP vo vscc vsco VSHLI
Intemational Public Sector Accounting Standard Japan Bank for Intemational Cooperation Kreditanstalt fur Wiederaufbau Livelihood Support Ministry o f Agriculture, Livestock and Samurdhi Millennium Development Goals Management Information System Monitoring, Leaming and Evaluation Ministry of Rural Economy Mahaweli Restructuring and Rehabilitation Project Maha Sabha National Competitive Bidding Non-Govemmental Organization Operation and Maintenance Project Appraisal Document Provincial Council Project Implementation Plan Participatory Rural Appraisal Poverty Reduction Strategy Paper Pradeshiya Sabha Request for Proposal Special Account Small Group Support Organization Statement o f Expenditure Sub-project Committee Terms o f Reference United Nations Development Program Village Development Plan Village Organization Village Savings and Credit Committee Village Savings and Credit Organization Village Self-Help Leaming Initiative
V ice President: Praful C. Pate1 Country Director: Peter C. Harro ld
Sector Director: Constance A. Bernard Sector Manager: Gajanand Pathmanathan
Task Team LeaderKO-Task Leader: Meena M. Munsh f le r rence Abeysekera
FOR OFFICIAL USE ONLY
S R I LANKA Community Development and Livelihood Improvement “Gemi Diriya” Project
CONTENTS Page
A . STRATEGIC CONTEXT AM) RATIONALE ............................................................................... 1 Country and sector issues .................................................................................................................. 1 Rationale for IDA involvement ........................................................................................................ 2 fHigher ldvel objectives to which the project contributes ................................................................. 2
1 . 2 . 3 .
B . PROJECT DESCRIPTION ............................................................................................................... 2 -I 1 . Lending instrument .......................................................................................................................... 2
Program objective and phases .......................................................................................................... 3
Project development objective and key indicators ........................................................................... 4
Lessons leamed and reflected in the project design ......................................................................... 5
Altematives considered and reasons for rejection ............................................................................ 6
2.
3 . 4 . 5 . 6 .
Project components .......................................................................................................................... 4
C . IMPLEMENTATION ........................................................................................................................ 7 1 . Partnership arrangements (if applicable) ..................... ............................................................ 7
Institutional and implementation arrangements ............................................................................... 7
Monitoring. leaming and evaluation o f outcomeslresults ............... 4 . Sustainability .......................................................................... ....................................... 10
Crit ical risks and possible controversial aspects ............................................................................ 11 6 . Grant conditions and covenants .................................................... ......................................... 12
2 . 3 . ......................................... 9
5 .
D . APPRAISAL SUMMARY ............................................................................................................... 13
Economic and financial analyses ................................................................................................... 13
2 . Technical ......................................................................................................................................... 13
3 . Fiduciary ........................................................................................................................................ 14
4. Social ........................................................................................................ .............................. 15 5 . Environment ................................................................................................................................... 15
1 .
6 . Safeguard policies ............................................................................. ....................................... 16
7 Policy Exceptions and Readiness 16
Annex 1: Country and Sector or Program Background ........................................................................ 17
. ...................................................................................................
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................................ 23
Annex 3: Results Framework and Monitoring ....................................................................................... 25
This document has a restricted distribution and may be used by recipients only in the performance of their official duties . I t s contents may not be otherwise disclosed without W o r l d Bank authorization .
Annex 4: Detailed Project Description .................................................................................................... 31
Annex 5: Project Costs .............................................................................................................................. 38
Annex 6: Implementation Arrangements ................................................................................................ 39
Annex 7: Financial Management and Disbursement Arrangements ................................................... 58
Annex 8: Procurement Arrangements .................................................................................................... 69
Annex 9: Economic and Financial Analysis ............................................................................................ 79
Annex 10: Safeguard Policy Issues and Gender and Youth Study ....................................................... 80
Annex 11: Project Preparation and Supervision .................................................................................... 86
Annex 12: Documents in the Project F i le ................................................................................................ 87
Annex 13: Statement of Loans and Credits ............................................................................................ 88
Annex 14: Country at a Glance ................................................................................................................ 90
SRI LANKA
Source
COMMUNITY DEVELOPMENT AND LIVELIHOOD IMPROVEMENT “GEM1 DIRIYA” PROJECT
Local Foreign Total
PROJECT APPRAISAL DOCUMENT SOUTH ASIA
BORROWEFURECIPIENT IDA GRANT LOCAL COMMUNITIES Total:
SASRD
11.0 0.0 11.0 47.8 3.2 51.0
7.8 0.0 7.8 66.6 3.2 69.8
Date: March 5,2004 Country Director: Peter C. Harrold Sector Director: Constance A. Bernard
Team Leader: Meena M. Munshi Sector(s): Other social services (30%);General agnculture, fishing and forestry sector (25%);Water supply (20%);General industry and trade sector (1 5%);Sub-national government administration (10%) Theme(s): Rural services and infrastructure (P);Participation and civic engagement (P);Rural non-farm income generation (P) Environmental screening category: Partial Assessment Safeguard screening category: Limited impact
Project ID: PO74872
Lending Instrument: Adaptable Program Loan
Total Bank financing (US$5 1 .O mill ion equivalent) SDR 34.2 mil l ion
Pronosed terms: Standard IDA Grant terms I
Borrower: Democratic Socialist Republic of Sr i Lanka
Responsible Agency: Gemi Diriya Foundation, c/o Ministry o f Samurdhi, 7 A Reid Avenue, Colombo 7, S r i Lanka, tel: 94-1 1-2688947, fax: 94-1 1-2682029, batuwita@,sltnet.lk
Expected effectiveness date: August 15,2004 Exnected clnninn date: March 31.2009
[ ]Yes [XINO
[ ]Yes [XINO [ ]Yes [ IN0 [ ]Yes [XINO
[ X]Yes [ ] N o
[XIYes [ ] N o
Does the project depart from the CAS in content or other significant respects? Re$ PAD A. 3 Does the project require any exceptions f rom Bank policies? Re$ PAD D. 7
I s approval for any pol icy exception sought f rom the Board? Does the project include any critical r isks rated “substantial” or “high”? Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D. 7
Have these been approved by Bank management?
Project development objective Re$ PAD B.2, Technical Annex 3 The development objective o f the proposed 12-year program i s to enable the rural poor to improve their l ivelihood and quality o f life. The objective o f the proposed f i r s t four-year phase o f the program would be to enable the communities o f Uva and Southern provinces to build accountable and self-governing local institutions and to manage sustainable investments by: (i) devolving decision-making power and resources to community organizations; (ii) strengthening selected local governments which demonstrate responsiveness and accountability to rural communities; and (iii) working with federations o f village organizations, the private sector and Non-Governmental Organizations (NGOs) o n economic empowerment to increase the size and diversity o f l ivelihood options. Project description Re$ PAD B4, Technical Annex 4 The proposed project includes the following five components: (i) Component 1 : Village Development to strengthen Village Organizations (VOs) and fund priority sub- projects. (ii) Component 2: Institutional Strengthening to build the capacity o f local and national agencies and support organizations to respond to community demands. (iii) Component 3: Innovation Seed Fund to p i lo t innovative ideas that need experimentation, learning and incubation. (iv) Component 4: Project Management to facilitate overall coordination, implementation and management o f the project. (v) Component 5: Village Self-Help Learning Initiative pi lot to complete implementation o f the ongoing pi lot in Polonnaruwa district. Which safeguard policies are triggered, if any? Re$ PAD D. 6, Technical Annex 10 Environmental Assessment OPBP 4.01, Pest Management OP 4.09, Safety o f Dams OP/BP 4.37 Significant, non-standard conditions, if any, for: Re$ PAD C. 7 Board presentation: None
No
Loadcredi t effectiveness: None
General Implementation and Proiect Management (i) The Gemi Di r iya Foundation (Foundation) shall implement the project in accordance with the Project Implementation Plan (PIP), the Community Operational Manual (COM), and the Environmental Management Framework (EMF) as agreed with International Development Association (IDA). (ii) The Foundation shall ensure that i ts Chief Executive Officer (CEO) shall be assisted by suitably qualified and experienced procurement, financial, and operational specialists and other staff in adequate numbers to perform project implementation and monitoring functions. (iii) The Foundation shall appoint by n o later than September 30, 2004, and thereafter maintain during the project implementation period, internal auditors, whose qualifications and experience are satisfactory and acceptable to IDA.
(iv) The Foundation shall establish by no later than by September 30, 2005, and maintain thereafter during the project implementation period, a satisfactory computerized FMS for the project, acceptable to IDA.
Sub-Proi ec ts (v) The Foundation shall ensure that: (a) community sub-projects would be selected and appraised in accordance with the criteria and procedure specified in the COM; (b) Grant funds would be released to VOs and PSs implementing the project in a timely manner in accordance with agreed Sub-Grant Agreements; (c) the Sub-Grant Agreements would be used exclusively to finance goods, works and services required for preparation and approval o f Village Development Plans (VDPs); and (d) each Sub- Grant shall be calculated according to a pre-determined cost-sharing formula as specified in the COM. (vi) The Foundation shall prepare by September 30, 2004, a long l i s t o f accredited and competent support organizations and service providers and widely publish it to enable transparent selection by VOs and Pradeshiya Sabha (PSs).
Land Use and Acquisition (vii) In carrying out the Project, the Foundation shall ensure that there would be no involuntary land acquisition under the project; and the Project shall be implemented as far as reasonably practicable on publicly-owned land, using exclusively land free from squatters, encroachments or other encumbrances; any acquisition o f private land, if needed, would be through outright purchase at market rates or through voluntary donation and in accordance with guidelines and procedures set forth in the PIP.
Monitoring and Evaluation (viii) The Foundation shall prepare an annual plan and budget for implementing the project for the financial year, not later than October 31 o f each year, starting from year 2004, and such plan will be finalized not later than December 3 1 o f that year taking into account IDA’S comments. (ix) The Foundation shall carry out an evaluation o f implementation o f the on-going intensive hands-on leaming phase covering twenty-four Grama Niladhari Divisions (GNDs), not later than June 30, 2005; review with IDA the lessons leamed; and thereafter incorporate such lessons in the design and implementation o f subsequent batches. (x) The Foundation shall, beginning not later than December 31, 2004, have technical, social, environmental, and process audits (independent reviews) o f the Project undertaken at six monthly intervals by external independent agencies, share results o f such audits with IDA, and integrate the lessons from such audits by talung corrective measures as may be necessary. (xi) The Foundation shall carry out a mid-term review by September 30, 2006.
A. STRATEGIC CONTEXT AND RATIONALE
1. Country and sector issues
A.l.l Poverty reduction in rural areas i s a key objective o f the Government o f Sri Lanka’s (GOSL) poverty reduction strategy. Almost a quarter o f Sri Lanka’s population are s t i l l poor, and 90% o f them l ive in rural areas or estates. There are large regional disparities in poverty incidence, with the south and north east showing higher levels o f poverty (although comprehensive poverty data for the north east i s laclung). In the recent years, as part o f i t s sectoral work, IDA has completed two major studies-”Sri Lanka: Poverty Assessment’’ and “Promoting Agricultural and Rural Non-farm Sector Growth”. The f i rs t study shows that poverty in Sri Lanka i s largely a rural phenomenon and that the majority o f the poor are employed in apcul ture. The second study outlines a number o f key constraints, including poor access to critical infrastructure and services (such as, roads, markets, telecommunications, electricity and banlung services), ineffective public sector expenditure programs, poor f low o f information on technology transfer, dominance o f public sector as a service provider and underutilization o f private sector interests and initiatives. L i ke other South Asian countries, poor communities in Sri Lanka lack access to basic services and financial resources to improve their income and welfare. In addition, the poor lack decision- malung power to articulate local development priorities. In the search for sustainable solutions to address these problems, GOSL has been implementing a variety o f development programs for several decades. Unfortunately, most o f these efforts have not been able to contribute adequately to the government’s goal o f alleviating rural poverty o n a sustainable basis.
A. 1.2. Over the past four years, GOSL has made major efforts to deepen i t s understanding o f the nature and root causes o f poverty in Sri Lanka, mainly to reassess and reformulate i t s pol icy fi-amework for reducing poverty. GOSL’s Poverty Reduction Strategy Paper (PRSP) leans towards greater reliance on economic opportunities and growth than on redistribution; addresses the inefficiencies and inequities in the social protection system, particularly in the Samurdhi program’; and promotes empowerment o f the poor through improved governance. The primary goals o f the GOSL’s strategy are to secure peace, growth and equity and to achieve significant transformation in the quality o f l i f e o f the people especially in rural areas, through increased incomes, and invigoration o f the rural economy.
A.1.3. Although, Sri Lanka has made remarkable progress in the area o f human development, equity remains a serious issue for two reasons. First, equity i s needed to ensure balanced growth at the national level, with a special focus on the southern part that i s lagging behind the rest o f the country. The volume of resources currently available (through various programs) in the southern provinces (Uva and Southern Province) i s considerable. Despite this, a large share o f these resources either does not reach the rural poor, or i s not directed to activities that are not among the highest priorities o f the poor, or i s not delivered in a cost effective manner. Second, Sri Lanka may not be able to meet the Mi l lennium Development Goals (MDGs) if it does not achieve equity.
A. 1.4. Faced with these challenges, and recognizing the need for innovative solutions to alleviate rural poverty, GOSL has taken a pol icy decision to address poverty in the country by adopting the Community- Dr iven Development (CDD) approach.
’ Samurdhi i s a national poverty alleviation program implemented since 1995-96, by the Ministry o f Samurdhl, and has been designed to focus on the poor and vulnerable in rural areas. The program covers a wide range o f services, such as, monthly cash grants to the recipients, subsidized consumer items; a compulsory savings and credit mechanisms using a village level banking system; an insurance mechanism for the poor; scholarships and books and other basic needs for school children, etc. The program has a wide geographic coverage--25 districts (3 10 Divisions and 14,000 GNDs, implemented by a cadre o f 26,000 specially recruited social mobilizers) with an annual budget o f about Rs. 13.5 billion.
1
2. Rationale for IDA involvement
A.2.1. GOSL has requested IDA to assist in adopting the CDD approach and developing a long-term strategy for transferring funds for rural development through this approach. I t believes that IDA’S support wil l trigger a strong demonstration effect nationwide. IDA i s uniquely positioned to support GOSL’s long-term reform agenda o f devolving powers to communities and local governments, and can make available to GOSL i ts considerable knowledge o f national and international experience and best practices. By serving as a facilitator, IDA can play a critical role in promoting local institutions as key partners in the local development process, be catalytic in helping to consolidate the participatory and transparent resource allocation at the local level, and ensure that these processes continue beyond the l i fe and scope of the project, when external support will be gradually phased out. In the context o f this program, IDA i s in constant dialogue with other international agencies, including ADB, JBIC, UNDP, GTZ, KfW and IFAD.
3. Higher level objectives to which the project contributes
A.3.1. The proposed program i s closely aligned to GOSL’s strategic priorities. I t would particularly focus on rural infrastructure, which i s viewed as a major bottleneck for increasing rural growth, strengthening market, credit and technical support services to the poorer communities, strengthening local governments’ planning and implementation capacity, and ensuring effective involvement o f the communities in the programming o f investments and their implementation. By improving access o f village communities to basic economic and social infrastructure and productive opportunities, the proposed project will help raise incomes and improve well-being. The use o f participatory processes that have proven to increase the voice o f rural communities in priority-setting and decision-malung over resource allocation will help build social capital, strengthen local governance, and improve the effectiveness and sustainability o f development mechanisms.
A.3.2. The Country Assistance Strategy (CAS), discussed in April 2003, indicates a strong focus on support to the peace process, growth and equity. To achieve sustainable poverty reduction, the CAS recommends support for well targeted anti-poverty programs to enhance the human and physical capital of the poor, both to improve social conditions and to allow communities to make better use o f economic opportunities. In l ine with the CAS goals, the proposed program promotes sustainable poverty reduction in the poor regions o f the country and helps to leverage resources for local development.
A.3.3. The proposed program also supports the MDGs of: (i) improving incomes o f the poorest - reducing the proportion of people living on less than US$1 a day (Goal 1, Target 1); (ii) promoting gender equality and empowering women (Goal 3, Target 4); and (iii) sustainable access to safe drinlung water and improved sanitation (Goal 7, Targets 10 & 11).
B. PROJECT D E S C R I P T I O N
1. Lending instrument
B.1.1. The CDD approach adopted by the project to address rural poverty focuses on building and sustaining village level institutions and transferring decision-malung responsibilities and resources to communities. International experience suggests that sustainable community development i s a long-term process and sustainable poverty reduction cannot be achieved quickly. Experience also suggests that the scaling up o f anti-poverty programs needs to be approached in a gradual and phased manner to allow the institutional support framework to be established. Against this background, GOSL and IDA have agreed that a long-term programmatic approach would be most suitable for addressing sustainable poverty
2
reduction in Sri Lanka. The Adaptable Program Loan (APL) instrument has therefore been identified as the appropriate lending instrument for this program.
2. Program objective and phases
B.2.1. The long-term objective o f the proposed program i s to support GOSL’s strategy o f reducing rural poverty and promoting sustainable and equitable rural development through: (i) better access o f the poor to basic social and economic infrastructure and services and support for productive activities; and (ii) the development o f policies, rules, systems, procedures and institutional arrangements that would al low the government to transfer funds directly t o communities and provide them with technical and other support o n a demand-driven basis. The key expected outcomes o f the program are: (a) at least 75 percent o f the households in the project area benefit fi-om increased income, incremental income generated from sub- project investments and improved access to social and economic infrastructure; and (b) at least 50 percent o f national, provincial and district budgetary resources for rural development are channeled directly t o community organization and reflect community priorities.
B.2.2. The project will achieve the program goals by following a phased approach o f progressive geographic expansion (ie., the “horizontal” version o f the APL) and policy deepening (ie., vertical version o f the APL). GOSL’s vision o f the program, as conveyed through the Letter o f Development Policy, i s to influence the overall transfer o f budgetary resources to communities through decentralized programs. The performance o f key local government institutions would be clearly monitored to draw lessons for future pol icy dialogue with the Ministry o f Finance and the Ministry of Policy Development and Implementation and with other stakeholders.
B.2.3. The APL instrument will provide a flexible and long-term approach under which IDA would commit support for 12 years (about US$181 .O mill ion) in three overlapping phases. The program would cover 4,000 to 5,000 village communities in about 2,000 Gram Niladhari Divisions (GNDs - lowest administrative unit) in 12 years’ time. At the end o f each phase, the expected outcomes would be to have local self-goveming institutions that are able to manage their resources sustainably and to mobilize resources from the private and public sector. Overall, the lessons leamed fi-om each phase would be incorporated into the strategies and approaches o f the next phase. The process therefore would allow for continuous adjustment o f the project design, early r i s k identification, and implementation o f corrective measures before expanding to other phases. If the performance triggers are not met, subsequent phases may not take place.
B.2.4. Phase 1 (APL 1) would cover the f i rs t four-year period, supported by an IDA grant o f US$51.0 mi l l ion (subject o f this PAD) and would be implemented in about 1,000 village communities (in about 5 10 GNDs) in two provinces o f U v a and Southem Province. The program would be deepened in Phase 1 provinces by enlargmg the scale o f the proposed activities and focusing o n institutional change in local governments to enable them to become more responsive to citizens’ demands and o n establishing federations and networks. The program would be gradually expanded f rom the southem districts to include a l l the poorest districts o f the country. Phases 2 and 3 (APL 2 and 3) will be initiated independently o f the termination dates o f the previous phase and would cover 800 GNDs and 700 GNDs respectively. Each Phase will begin when readiness criteria for expansion are satisfied. During Phases 2 and 3, the project will also invest in institutional partnerships which will increase the communities’ ability t o bargain and negotiate and to achieve economies o f scale.
B.2.5. Each Phase will focus o n three stages: (i) empowerment o f communities and building o f community organizations i.e. Vil lage Organizations (VOs); (ii) institutional development process, which would include formation and strengthening of federations o f VOs and building accountable and demand
3
responsive local governments; and (iii) forging partnerships between federations of VOs, local government, financial institutions, the private sector, etc.
B.2.6. Moving from Phase 1 (APL 1) to Phase 2 (AF’L 2) will depend on achievement o f the following performance triggers related to the satisfactory implementation o f Phase 1: (i) at least 60% o f VOs in the project villages covered in the f irst two years o f Phase 1 have accessed the Village Development Funds (VDFs) while complying with ru les as described in the COM; and have at least completed one sub-project activity; (ii) at least 30% o f women participate in decision makmg by holding management positions (either as members o f the Board o f Directors or as members o f VOs’ sub-committees) in the f i rs t two years o f Phase 1; (iii) at least 50% o f the members o f the project villages covered have contributed 20% or more toward capital cost of community infrastructure activities; (iv) at least 50% o f the members o f the project villages covered during the first two years of Phase 1 have benefited from project interventions; and at least 60% o f these beneficiaries belong to the poorest households as identified by the Maha Sabha; and (v) at least 25% o f the Divisions covered in the first two years o f Phase 1 have established participatory sub-committees at the PS level with 30% elected representatives and 70% representatives o f community organizations to enhance their capacity for decentralized decision making.
B.2.7. The performance triggers for moving to Phase 3 (APL 3) will be related to policy and horizontal scaling up o f the program. Policy triggers will refer to the establishment o f institutional arrangements for transfer o f resources and delivery of services following the CDD approach. These triggers would be reviewed and agreed during the preparation o f Phase 2 (AF’L 2).
3. Project development objective and key indicators
B.3.1. The overall development .objective o f the 12 year program would be to enable the rural poor to improve their livelihood and quality o f l i fe. The objective o f Phase 1 would be to target poor communities in the Uva and Southern provinces and improve their livelihood and quality o f l i fe. Phase 1 would enable them to build accountable and self-governing local institutions and to manage sustainable investments by: (i) devolving decision making power and resources to community organizations; (ii) strengthening selected local governments that demonstrate responsiveness and accountability to rural communities; and (iii) working with federations of VOs, private sector and Non-Govemmental Organizations (NGOs) on economic empowerment to increase size and diversity o f livelihood.
B.3.2. The key performance indicators to measure the achievements o f the project activities would be the following: (i) number of VOs formed and percentage o f these functioning effectively in priority setting and decision makmg on resource allocation; (ii) percentage o f sub-projects that are implemented and maintained by the communities; (iii) percentage increase in household incomes o f the poor; (iv) percent o f VOs with sustainable savings and credit system at the end o f the project; and (v) an increase in private sector investment in the communities.
4. Project components (refer to Annex 4 and 5)
B.4. The proposed project would include the following five components:
B.4.1. Component I: Village Development (USU6.6 million) - This component will have two sub- components: (i) Development and Strengthening of Village Organizations; and (ii) Funding o f Community Sub-projects. The first sub-component will help develop self-reliant and self-managed people’s organizations for community development and livelihood improvement in rural areas. The activities under the second sub-component would include capacity building, social and community
4
infrastructure, and livelihood support activities. procurement o f goods, training, and other services.
The component will finance village sub-projects,
B.4.2. Component 2: Institutional Strengthening (US$6.0 million) - This component would strengthen capacity o f local and national agencies and support organizations (SOs) to facilitate implementation o f the program effectively and broaden their skil ls, especially in participatory development, as wel l as to develop a monitoring and learning system to capture results on the ground, and respond to the needs and demands o f the community. The component will include introduction o f social and public accountability mechanisms, l ike participatory budgeting, community report cards, social audit and expenditure trackmg to trigger changes in responsiveness and accountability among local govemment institutions and communities. The component will also include a Policy Dialogue sub-component to help policy makers develop policies, rules, systems and institutional arrangements that would allow the government to transfer funds and technical support to communities o n a demand driven basis. The component will finance training, workshops, technical assistance, exposure visits, and goods.
B.4.3. Component 3: Innovation Seed Fund (US$1.5 million) - This component would pi lot innovative ideas that need experimentation, learning and incubation and have the potential for being scaled up and replicated. Some o f the pilots will include technology and product development related to agricultural processing and value addition and information technology in collaboration with other development initiatives l ike E-Lanka, U v a Community Radio and Pradeshiya Sabha Incentive Fund. The component wil l finance goods, training and services.
B.4.4. Component 4: Project Management (US$4.7 million) - The component would facilitate overall coordination and management o f the project at national, provincial and divisional levels. The component will finance goods, works, services and recurrent costs.
B.4.5. Component 5: Village Self-Help Learning Initiative (VSHLI) Pilot (US$l.O million) - The component would complete implementation o f the ongoing p i lo t in Polonnaruwa district. The pi lot was initiated in 2000 under the Mahaweli Rehabilitation and Restructuring Project (MRRP), which closed in December 2003, to test an institutional model that empowers village communities and builds partnership at the local level. The pi lot has successfully demonstrated that given the participatory framework, communities can articulate their needs and priorities and take responsibility for implementing and monitoring village development. The pi lot will n o w test the second stage o f institutional development - federation o f VOs and partnership with private sector. The component would finance village subprojects, goods, training and services.
5. Lessons learned and reflected in the project design
B.5.1. Experience with GOSL's previous work in poverty alleviation and the recent experience with the C D D approach under the pi lot project supported by IDA', as wel l as with several other interventions funded by GOSL, IDA and other donors, have provided extensive lessons and generated beneficiary expectations with regard to sustainable results in poverty alleviation. The proposed program seeks to build on the following lessons: 0
0
Best results on the ground are obtained by listening to the people and enabling them to participate in the design and implementation o f projects based o n self-identified needs and priorities. Experience has shown that the CDD approach can reduce bureaucracy, eliminate administrative bottlenecks and reinforce accountability for project outcomes by placing decision malung closer to beneficiaries.
The proposed program builds on the success of a pilot - Village Self-Help Leaming Initiative (VSHLI) - 2
that GOSL has been implementing with IDA support for the last four years.
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e
6.
Provide direct finance to community groups has shown to improve cost effectiveness o f small infrastructure works, build community confidence and capacity to manage, and increase accountability of service providers to communities. Communities are willing to contribute-in cash and labor-and invest their t ime in managing (including Operation and Maintenance (O&M)) sub-projects when they: (i) see clear benefits; (ii) have a role in managing their own development and controlling and allocating funds for various priorities (accountability and authority are clear); (iii) select the common and basic needs first; and (iv) have full freedom in selecting the technology options and in procuring goods and services. Transparency and proper dissemination of project rules are the two most critical factors for community participation and empowerment. Simple and clear rules o f business need to be widely disseminated and then consistently and transparently enforced. Once the rules are agreed upon, they should be adhered to by a l l parties concemed. Developing effective institutional linkages with the relevant local authorities and assisting capable members o f communities (especially the youth) to develop as “paraprofessionals”, f rom the inception itself, are critical factors for overall project sustainability. Sustainability o f externally financed activities - such as a loan fund - i s enhanced when communities have a strong sense of ownership of the assets and effective guidelines and systems to manage the assets. There should be a simple and user-friendly monitoring and evaluation system that facilitates the subproject evaluation process, provides feedback and al l necessary information to improve targeting and efficiency, and functions as management and planning tool. Intensive supervision of C D D projects i s an indispensable determinant o f success and sustainability. I t needs to be reinforced at a l l levels and involve local agencies that are closest to the communities, particularly PS and Divisional staff.
Alternatives considered and reasons for rejection
B.6.1. In designing the proposed project, various altemative approaches were considered. included the following options:
These
Traditional, centralized approach to implementation using line agencies: Experience with integrated rural poverty reduction projects in Sri Lanka during the past 20 years has demonstrated that more centralized approaches to poverty reduction are not very effective in dispersed rural areas for reasons including: coordination difficulties, sub-projects that did not accurately respond to community needs and poor sustainability. By contrast, the project builds o n a successful community driven pilot, recognized for its effectiveness, transparency and strong performance in building social capital among
.rural communities.
Channeling resources directly to line agencies: Decentralization o f finance and program responsibilities to l ine agencies without building capacity at the community level t o interact effectively with these governments, carries the risk o f merely replicating difficulties associated with centralized decision-making albeit at a lower level.
A program loan to the central government to be passed on to the Provincial Councils: Consideration was given to a single large IDA loan to GOSL to be passed o n to the provincial councils. However, the benefits in terms of demonstrated commitment and ownership o n the part of village communities were judged to outweigh any apparent savings in time and cost o f processing individual provincial loans. Implementation delays resulting from more complex arrangements for transferring funds f rom the central to the provincial level might offset such savings and would certainly undermine the credibility o f the project among the beneficiaries.
6
C. IMPLEMENTATION
1. Partnership arrangements (if applicable)
C. 1.1. N o t applicable
2. Institutional and implementation arrangements
Project Design Elements:
C.2.1. The main strategic choices made in the project design include:
0 Cost Sharing to ensure genuine demand for services and community ownership and commitment.
0 Institutional Reforms and Decentralization to ensure institutional sustainability. Local
The participating communities contribute between 20 to 30% in infrastructure sub-projects and ensure cost effectiveness o f the investments by exploring various possibilities and options.
government would be involved, in a phased manner, to increase their capacity to deliver services and raise revenues.
mechanism would be strengthened by establishing appropriate rules, regulations and systems that would ensure transparency and accountability.
l imited resources among the competing needs and accountability o f local organizations. Each VO would be eligible for a fixed budget envelope based on per capita criteria and funds would be transferred to the communities on achievement o f agreed milestones.
the project. In the case o f savings and loans activities, the community organizations will be responsible for maintaining the value o f the loan fund.
among the communities and other stakeholders.
o f community sub-project proposals have total independence and autonomy to appraise and monitor the project in accordance with the agreed rules.
0 Direct Transfer of Funds to Communities to ensure proper accountability and use o f funds. This
Fixed Budget Envelope and Milestone-Based Disbursement to ensure rational allocation o f 0
0 Devolution of O&M Activities to Communities to ensure the sustainability o f assets created under
Simple and Transparent Rules of Engagement to ensure proper dissemination and understanding
Independence and Autonomy of the “Guardian of Rules” t o ensure that appraisers and approvers
0
0
C.2.2. Project Implementation Process: The project would be implemented according to rules and procedures agreed in the Project Implementation Plan (PIP) and COM. These documents outline roles and responsibilities o f individual agencies and provide details o f project processes and project cycle. The PIP and COM are based on the experiences gained during the implementation o f the V S H L I pi lot and testing o f hands-on learning phase and various preparation workshops, studies and analyses that were carried out as part o f project preparation. The hands-on learning phase, in particular, focused o n validating various assumptions about community participation and ownership, willingness to contribute, partnering capabilities o f local institutions and capacity building efforts required. COM will be subject to periodic reviews conducted jo in t ly by GOSL and IDA, with stakeholders’ participation, to ensure flexibil i ty and to promptly address any constraints to the successful implementation o f the program. Any changes in the PIE’ and COM would require IDA’S pr ior concurrence.
C.2.3, Proposed Implementation Arrangements : The implementation arrangements at various levels are described below:
7
(a) Community Level Arrangements. The proposed institutional arrangements would ensure that communities are in the driving seat in terms o f organizing themselves, priorit izing their investments, allocating resources, preparing subproject proposals, implementing sub projects and maintaining their assets. There would be three levels o f community organizations: (i) Village Assembly or Maha Sabha (MS); (ii) VOs; and (iii) Federation o f VOs.
Village Organization (VOs): Constituted under the Companies Act, VOs comprise the MS, the Board o f Directors, and various sub-committees. VOs will have access to a Village Development Fund to undertake investments in social, economic and community infrastructure. Part o f the Vil lage Development Fund will be allocated to a Loan Fund that will enable villagers to engage in income generation activities o f their own choice. T o be eligible for the Village Developmental Fund, communities must agree to the project rules, and proceed through the “project cycle”. Vil lage communities will receive technical assistance in participatory appraisal, community contracting and financial management to competently manage the developmental funds. All critical decision-mahng power and O&M responsibility will be at the community level. SOs wil l partner with local level agencies and local govemments and will p lay a critical ro le in creating community awareness and ensuring empowerment. Over time, the project would support federations o f VOs to achieve scales o f operations especially in income generating programs and to establish direct partnership with the private and public sectors.
Jb) Divisional Level Arrangements: Divisional Facilitation Teams (DFTs) will be responsible for community facilitation. DFTs will assist communities in planning, implementation, monitoring, analyzing and adjusting the project. Their key role includes promoting and guarding program principles at the divisional level, helping VOs in securing services o f SOs and other service providers, providing technical assistance as and when requested by VOs, reviewing progress o f implementation and helping VOs in removing hindrances to project implementation, and resolving conflicts.
Pradeshiya Sabha (PS) Level: The devolution o f power, responsibilities and funds to a highly committed local government authority i s critical for institutional sustainability and scaling up o f the project. For this purpose, PS level would be involved throughout the program. The project would invest in building their capacity and creating an enabling environment for them to be able to respond to community demands. Their involvement would be achieved gradually, in three stages, as described in Annex 6.
lc) District Level Arrangements: The District Facilitation Team (DrFT) will promote and guard the program principles at the district level. DrFTs will assist in the self selection o f GNDs, prepare a roster o f service providers, provide technical assistance and support, facilitate linkages with private sector, ensure convergence and linkage with other projects, review progress and resolve conflicts at the district level.
(d) National Level Arrangements: An Inter-ministerial Committee and the Gemi D i r i ya Foundation would be the two institutions at the national level. The Inter-ministerial Committee, consisting o f Ministers o f Samurdhi, Rural Economy, Southem Development, and Central Development, will be chaired by the Minister, Samurdhi and will p lay an advisory and oversight role.
Gemi Diriya Foundation (Foundation): This i s an autonomous agency established under the Company’s Act. ’The Board will be chaired by the Secretary, Samurdhi, and will comprise the Secretary Ministry o f Rural Economy (ME) a senior representative o f Planning and Policy Implementation Ministry, a senior representative o f Finance/ERD, two representatives f rom outside the Govemment (such as CDD practioners, private sector, banking sector, etc) whi le the Chief Executive Officer (CEO) would act as the Convener. The Board would review project progress, resolve impediments, sanction annual plans, provide policy reform and strategic support, and act as guardian of project rules. The CEO would
8
be responsible for the day-to-day management o f the project and be accountable to the Board. The Foundation would be responsible for project coordination, monitoring, financial management, procurement, disbursement, and audit. The operational autonomy o f the Foundation would allow the management team to remain flexible and adapt, based o n implementation experience. The staff o f the Foundation will be selected through open competition and be professionally competent. The Foundation will have two Teams: (i) Management Team at the national level; and (ii) Appraisal and Monitoring ( A M ) Team located in each Province. Bo th Teams would be headed by the CEO o f the Foundation. The Management Team at the national level would be responsible for the project information education campaign and promotion, overall coordination and monitoring and evaluation, and would consist o f three units: (a) Vil lage Institutions Unit; (b) Business and Livelihood Development Unit; and (c) Project Management Support Unit. The A&M Team with one f ie ld office in each o f the two provinces will be responsible for institutional and technical appraisal o f the sub-projects and for ensuring compliance with the rules o f the game and good quality o f service provision to communities. The project would devolve powers, responsibilities and funds to local governments by using a gradual approach in three phases (See Annex 6).
Funds Flow Arrangements:
C.2.4. Disbursement Procedures: Disbursements f rom the Grant account would init ially be made o n the transaction-based system (reimbursement with full documentation) and against statements o f expenditure, direct payment and Special Commitment. GOSL may request withdrawals f rom the Grant account to be made on the basis o f reports to be submitted to IDA in form and substance satisfactory to IDA, such reports to include the Financial Management Reports (FMRs) and any other information as IDA shall specify by notice to GOSL (Report-based Disbursements). Annex 7 gives details o n the fund f l ow processes.
C.2.5. A Special Account (SA) would be opened at the Central Bank and would be operated by the Foundation. The authorized allocation o f the Special Account would be US$3.8 mill ion, that represents about four months o f average estimated eligible expenditures f rom the IDA Grant. The Special Account would be operated in accordance with IDA’S operational policies.
C.2.6. Retroactive Financing: GOSL has requested retroactive financing o f US$2.0 m i l l i on to meet the expenditures incurred after August 3 1, 2003, including those that are anticipated upto the Grant signing. The activities to be covered by retroactive financing are consistent with the project’s financing categories as agreed with IDA.
3. Monitoring, Learning and Evaluation of OutcomeslResults:
(2.3.1. Monitoring will have two components. One would deal with pol icy impact and compare performance o f existing systems and procedures with those being tested out in the project and compare i t s impact and cost effectiveness with other governmental welfare programs and service delivery systems. Results o f policy level impact would be continuously shared with decision makers in the Ministry o f Finance and Ministry of Policy Development and Implementation. The second component o f monitoring will deal with project level impacts. A Monitoring, Learning and Evaluation (ML&E) system has been developed under the project, and i s being tested out in 24 pi lot GNDs, with the objective o f generating analytical information o n the project’s progress and performance, and disseminating this information among stakeholders to enable them to effectively address project implementation issues, and revisehefine the implementation approach as needed. The ML&E system will include: (i) monitoring o f project progress and utilization o f village development funds- or inputs, outputs and outcomes; (ii) monitoring o f performance o f project institutions; systems, procedures and processes; and (iii) project impacts. The ML&E system will be established at three different levels - community, divisional and national. The
9
information will f low from community members to the CEO through the divisional coordinator interfacing with divisional secretaries and service providers. As part o f monitoring and learning, six- monthly audits (independent reviews) would be carried out by an external agency to ensure that processes and procedures as agreed are followed. The lessons emerging from the independent audits (reviews) would be disseminated and discussed with the village level institutions, communities, divisional and district teams and SOs, and corrective measures would be taken on a continuous basis.
C.3.2. Social Accountability Mechanisms. The project would promote and set up social accountability mechanisms and systems within and between VO and community and service providers, and between the Foundation and the communities. Among other instruments, report cards will be used to ensure accountability o f VOs, service providers, DFTs and SOs to the communities. The project would promote transparency by openly displaying al l financial and physical information in accessible form. Social Audit Sub-committees (one o f the various VOs’ sub-committees) will use input and expenditure tracking and report cards to develop a culture o f accountability within communities. T h i s information will be used for developing rating system for VOs, and would be scaled up with local govemments after initial piloting.
4. Sustainability
C.4.1. The project will focus on ensuring sustainability o f investments. An effort i s made to create mechanisms to involve al l sections o f the community in the prioritizing o f investments, and in the selection o f technical options based on their affordability and viability. For infrastructure investments, the sustainability analysis would be made part o f the participatory appraisal at the community level to ensure selection o f technical choices that are affordable to the communities and can be managed and operated by the communities themselves. For livelihood support investments, the project would provide technical assistance and exposure to communities to ensure that viable activities are undertaken as business opportunities and that the products and services chosen by the communities have markets.
C.4.2. Strengthening the capacity o f local governments to provide public expenditures and services in a transparent and accountable manner directly to communities and strengthening o f VOs and savings and credit organizations owned by their members w i l l lead to institutional sustainability. Besides, the project will focus on developing a diversified sk i l l base (technical, financial and managerial) including fuflctional leaders and village para-professionals at the community level who would be hired and paid by VOs and other local institutions. The project will also support development o f a network or federated VOs which will support community organizations after the project period and also help them access markets, investments and the private sector.
C.4.3. Contributions by the village community members towards the capital cost and full contribution towards the recurring cost o f maintaining assets would lead to financial sustainability. Also, developing a capital base at the VO level by using contributions and income from credit given to members; encouraging a savings mindset to reach the goal o f sustainable livelihood, and linking savings and credit organizations to banks will lead to financial sustainability.
10
#, Critical risks and possible con
R i s k s
To Project Development Objectives 0 Foundation’s operations and
targeting o f poorest are subject t o polit ical interference
0 DFT at the division and DrFT at the district levels are not committed to the C D D principles o f devolution o f decision-making powers to the communities VOs are weak, have l o w or n o accountability and are unsustainable
0
0 Women may not be permitted to participate in key decisions and in O&M management
T o Component Results
0 Communities do not effectively prioritize their developmental needs
0 Communities may not be willing to share costs
oversial aspects
Risk Mitigation Measures
0 (i) Foundation has a competent CEO and would maintain an independent Board; (ii) continuous monitoring o n the status o f compliance o f the agreed rules o f the business between the Foundation and IDA; (iii) well-defined criteria and a transparent process for selection o f GNDs developed Intensive information and communication campaign o n CDD principles followed by capacity building support to implement C D D approach
0 (i) Resources available for capacity building o f village organizations; (ii) competent service providers would be identified for training and helping communities build strong institutions; (ii the project monitoring system will include mechanisms to develop a culture o f accountabilit within the VOs and the community; (iv) targeted intervention to build “functional leaders (parameters) and raise local resources. Project rules o f inclusion o f at least 30% o f 0
women at a l l levels particularly in decision- malung roles and at least 50% benefits would be closely monitored and gender specific traininglcapacity building provided to ensure the active participation.
0 Information dissemination o f proj ect guidelines and processes. Short negative l i s t o f sub-project that are ineligible for funding. Selection criteria for village communities will include willingness to pay. Good dissemination o f clear benefits o f investments to the communities will be carried out.
0
Risk Rating with
Mitigation
S
M
M
L
L
L
11
Sub-projects not maintained by communities
project appraisal criteria o f sustainability o f investments; and provide technical assistance to communities on O&M.
0 Emphasis on community participation in implementation and maintenance, ensure sub-
0 Inadequate andor untimely flow o f counterpart funds
0 PSs are not committed to the CDD principles and not accountable
and financial management. V- Negligible Risk; L -Low Risk; M- Medium Risk; S - S~bstantial Risk; H - High Risk;
High level GOSL commitment to the project should facilitate timely release o f funds; to service standards o f the Foundation, and local level teams will be monitored. The project would invest in capacity building o f PS functionaries on the ru les o f the game, village development planning, technical service provision
M
M
0 Overall Risk Rating: M
6. Grant conditions None.
C.6.1. Grant Covenants: The following are the main Grant Covenants:
0
0
0
GOSL shall take al l necessary actions to ensure that the Foundation remains responsible for management and coordination o f project activities. GOSL shall ensure the Memorandum and Articles o f Association o f the Foundation shall not be amended, suspended, abrogated, repealed, or waived without IDA’S prior consent. GOSL shall nominate or appoint the CEO, directors, and ordinary members o f the Foundation, with satisfactory and acceptable qualifications and experience, in accordance with the Foundation’s Memorandum and Articles o f Association after prior consultation with IDA.
General Implemen~ation and Project Management 0
0
GOSL and the Foundation shall implement the project in accordance with the PIP, the COM, and the Environmental Management Framework (EMF) as agreed with IDA. The Foundation shall ensure that i t s CEO shall be assisted by suitably qualified and experienced procurement, financial, and operational specialists and other staff in adequate numbers to perform project implementation and monitoring functions. The Foundation shall appoint by September 30,2004, and thereafter maintain during the project implementation period, internal auditors, with qualifications and experience satisfactory and acceptable to IDA. The Foundation shall establish by no later than September 30,2005, and maintain thereafter during the Project implementation period, a satisfactory computerized FMS acceptable to IDA.
0
0
Su b-Projects 0 The Foundation shall ensure that: (i) community sub-projects would be selected and appraised in
accordance with the criteria and procedure specified in the COM; (ii) Grant funds would be released to VOs and PSs implementing the project in a timely manner in accordance with agreed Sub-Grant Agreements; (iii) the Sub-Grant Agreements would be used exclusively to finance goods, works and services required for preparation and approval o f VDP; (iv) each Sub-Grant shall be calculated according to a pre-determined cost-sharing formula as specified in the COM; and (v) goods, works and services shall be procured in accordance with procedures as agreed in COM.
12
The Foundation shall prepare by September 30,2004, a long l i s t o f accredited and competent support SOs and service providers in a transparent manner and widely publish the l i s t to VOs and PSs.
Land Use and Acquisition The Foundation shall ensure that there would be no involuntary land acquisition under the project; and the Project shall be implemented as far as reasonably possible o n publicly-owned land; any acquisition o f private land, if needed, would be through outright purchase at market rates or donation and in accordance with guidelines and procedures set forth in the PIP.
Monitoring and Evaluation The Foundation shall prepare an annual plan and budget for implementing the Project for the financial year, not later than October 31 o f each year, starting f rom 2004, and such plan will be finalized not later than December 3 1 , o f that year taking into account IDA’S comments. The Foundation shall carry out an evaluation o f implementation o f the on-going intensive hands-on learning batch o f 24 GNDs, by June 30, 2005; review with IDA the lessons learned; and thereafter incorporate such lessons in the design and implementation o f subsequent batches o f GNDs. The Foundation shall, beginning by December 3 1, 2004, have regular technical, social, environ- mental, and process audits (independent reviews) o f the Project undertaken at six monthly intervals by external independent agencies, share results o f such audits with IDA, and integrate the lessons from such audits by talung corrective measures as may be necessary. The Foundation shall carry out a mid-term review and impact evaluation by September 30,2006, and furnish to IDA the reports.
.
D. APPRAISAL SUMMARY
1. Economic and financial analyses
D. 1.1, The proposed project focuses o n social organization and empowerment, improved local governance, capacity building and community initiated and demanded sub-projects, including income generation and rural infrastructure. Hence, economic opportunities f rom subprojects are but one o f the project’s outputs; the other two being empowered and active groups o f disadvantaged people and their ability to promote more effective, accountable and inclusive local institutions. Due to i t s demand-driven character, the project does not lend itself easily to a detailed ex-ante cost-benefit analysis and rate o f return calculations. I t will be the beneficiaries who ultimately determine the scope and mix o f the investments.
2. Technical
D.2.1. Based on the experience o f VSHLI pilot, the community, economic and social infrastructure would mainly consist o f activities, such as, rural water supply schemes, community and environmental sanitation facilities, water harvesting measures, minor irrigation rehabilitation, community centers, improvement o f inter village roads providing access to link roads and savings and credit facilities. Savings and Loan Guidelines, as part o f the COM, have been developed and will be accompanied by a well-documented accounting system. The community will choose the desired technology and service levels, based on their affordability, with the help o f SOs, divisional teams and technical service providers. A Technical Manual, as part o f the COM, has been developed with various technical options, and standards for viable per unit costs. Guidelines and codes o f conduct to guide the community and facilitation teams have been developed for effective decision malung during the planning and implementation process. DFTs will be responsible for facilitating and ensuring that the communities have access to trained technical service providers to support feasibility, design and implementation o f
13
subprojects. The &M Team would appraise community infrastructure sub-project proposals and ensure their compliance with technical standards and safeguard requirements, economic viabil ity and ease o f operation and management after completion. Adoption o f internationally tested labor based construction technique will be encouraged while implementing the sub-projects. Communities, SOs, divisional teams and A&M Team would supervise the quality o f works under implementation. Social audits by an internal sub-committee as wel l as extemal audits will be carried out every six months to check compliance with procurement process, quality o f material and works and financial management aspects.
3. Fiduciary
Procurement Issues: D.3.1. GOSL prepared guidelines on "Government Tender Procedure" in 1996 (revised in August 1997) under Chapter 13 o f the Financial Regulations. The Guidelines and Rules provide the framework for a l l public procurement in the country including Provincial Councils (PCs), local governments, etc. I t also includes a separate chapter (XIII) for projects assisted by foreign funding agencies (this chapter has been revised in December 2000 and issued as a separate booklet) and has resulted in marked improvements in the transparency o f procurement processes. These Guidelines are n o w being revised to accommodate recommendations following the Country Procurement Assessment Review (CPAR), which was completed in 2003.
D.3.2. Community Procurement: Procurement at the community level will be guided by the Community Participation in Procurement (CPP- Para. 3.15 o f the Procurement Guidelines). The procurement procedures, processes and methods have been developed extensively during the implementation o f the V S H L I pilot. These procedures and guidelines have been further reviewed during the project preparation, and are being tested in the 24 intensive learning GNDs. COM gives detailed procedures, rules and methods o f community procurement. Prior to transferring funds to VOs, community procurement training modules would be developed and the relevant committee members and Board o f Directors would be trained in community procurement.
D.3.3. Other Project Procurement: The Foundation will be responsible for the procurement o f goods and services for the remaining project components, and will comply with the IDA'S procedures as described in the relevant Guidelines. The capacity o f the Foundation core team and district and divisional level staff will need to be improved through procurement training programs both at national and provincial levels.
Financial Management Issues D.3.4. The financial management system proposed for the project i s adequate to meet GOSL and communities' project management needs as wel l as IDA'S fiduciary requirements as per OPBP 10.02. The financial management framework envisages that the project will maintain accounts using standard double entry cash hybrid-accounting systems. The project implementation agencies will prepare monthly/quarterly/annual reports required for project management at the village, district and national levels. The accounting and reporting system wil l be manual in the beginning and wil l move into a computerized environment during the l i f e o f the project. GOSL will, by September 30, 2005, establish and maintain thereafter the computerized Financial Management System (FMS).
D.3.5. The Financial Management Manual along with the Financing Agreements entered into between the Foundation and VOs would include detailed guidelines o n the agreed financial management arrangements. The main challenges to satisfactory financial management o f the project relate to the capacity to maintain quality and robustness o f the systems put in place, whi le scaling up the project. The financial management arrangements have consequently focused on: (i) simplifylng the financial management framework and minimizing the number o f accounting centers; (ii) building the robustness of
14
the appraisal mechanisms for sub-projects; and (iii) ensuring that the project invests substantially in building the capacity of communities in book-keeping and accounting through trainings o f office bearers o f VOs and developing a cadre o f para-professional book-keepers. Important lessons learned from the implementation experiences in other C D D projects in the region and during the implementation o f V S H L I p i lo t have been incorporated into the design o f the FMS. The financial management arrangements would focus o n providing local level transparency, social audit and self-accountability. The institutional framework for the project envisages adequate levels o f staffing for financial management and accounting functions at the national, provincial, district/divisional and village levels (Annex 7).
D.3.6. Audit: The Foundation, in consultation with the Auditor General o f Sri Lanka (AG), wil l appoint an independent firm o f chartered accountants to conduct annual audit o f the project. The audit would cover a l l project operations o f the national and provincial levels, and will also cover the VO accounts o n a sample basis. The selection and appointment o f the private Chartered Accountant (CA) firm will be based o n TOR(s) acceptable to IDA, and the selected firm will need to be acceptable to IDA. The audit report would consist of: (i) financial statements; and (ii) audit opinion confirming: (a) whether the project financial statements have been prepared in accordance with consistently applied Accounting Standards and give a true and fair v iew o f the operations o f the project during the year; and (b) that the withdrawals f rom the IDA Grant made o n the basis o f Statement o f Expenses (SOEs)/FMRs together with the procedures and internal controls involved in their preparation, can be relied on to support the related withdrawals. The auditor wil l be required to provide a letter to project management highlighting findings during the audit. The audit will be conducted as per internationally accepted standards and financial reporting will fo l low the International Public Sector Accounting Standard (IPSAS) standards.
4. Social D.4.1. The project seeks to improve the quality o f l i f e o f the target population through village investments under a C D D approach, thereby increasing the social capital o f rural communities v ia their participation at a l l levels o f the sub-project cycle. Under the project’s participatory approach, the wide inclusion o f a l l potential beneficiaries including women, youth and vulnerable groups, would be ensured through an information campaign designed to create awareness regarding the project’s objectives, rules and guidelines, and how to access project benefits. A gender and youth strategy specifically focusing o n their ro le as decision makers and beneficiaries has been designed and will be implemented during project implementation (Annex 10). The project also includes incentives and’rewards (such as Grants to the Poorest and Incentive Fund) for the VOs to include the poorest and vulnerable members in the project benefits. Strategies to mobilize active participation and inclusion o f the most vulnerable members such as, the landless, widows and female-supported households, and the disabled have been incorporated.
5. Environment D.5.1. The project i s classified as category B as it i s expected to be beneficial f rom an environmental and social perspective as the project investments will be small, very localized, and labor intensive. No significant impacts are expected o n any critical ecosystems or culturally or socially sensitive areas. GOSL carried out an Environmental Assessment (EA) o f possible activities that may be included in the project and a study to assess impact o f human-elephant conflict in the project areas and management options for their mitigation. Considering the demand driven nature o f this project, specific village investments or subprojects cannot be identified during preparation. As part o f the EA, an EMF has been developed, which will serve as a template for ensuring that village investments or subprojects are conducted in an environmentally sound manner. The EMF identifies: (i) tools for screening o f activities at the village level, including a negative l is t that would be excluded f rom project funding; (ii) screening and clearance procedures for village level activities at three levels (village, district and provincial); and (c) capacity building to ensure effective implementation o f the EMF at various levels. All sub-projects will be subject to environmental screening based o n the tools as identified in EMF and referenced in COM. A pest management plan and dam safety p lan have also been developed as part o f the EA. The pest
15
management strategy will attempt to strengthen linkages with existing programs o f the Department o f Agriculture, Provincial Departments o f Agriculture, Divisional Secretaries and NGOs. In terms o f the human-elephant conflict, the project will provide resources and options during village-level planning in the most severely affected areas to reduce and manage the conflict through promotion o f non-agricultural investments, crop protection devices, community patrolling and guarding, ecotourism and pi lot testing o f physical barriers.
D.5.2. Public Consultations: Public consultations were carried out, as part o f the environmental and social assessments, in al l project districts and provinces. Consultations were also held with officials o f the national, provincial, district and divisional level, and NGOs. Detailed consultations were held with 15 households in four villages in each o f the five project districts. The summary o f the draft EA and EMF have been made available at the District Secretariats and other public places for comment and feedback.
6. Safeguard Policies D.6.1. Involuntary land acquisition (OP 4.12): Most o f village sub-project activities need very l itt le or n o land acquisition. Land needed for income generation through private enterprise would be procured at market rates. A detailed Social Assessment (SA) carried out in the project area indicates that minor land needed for up-gradation o f common infrastructure i s already available. Other private facilities do not need involuntary land acquisition. Based on these considerations, OP 4.12 i s not triggered.
D.6.2. Indigenous people (OD 4.20): The SA indicates that the indigenous population (Veddas) i s located in a very l imi ted area o f U v a province and had been already integrated into the mainstream under Mahaweli Development Program. As such OD 4.20 i s not triggered.
Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.0 1) [XI [I Natural Habitats (OP/BP 4.04) [ I tx1 Pest Management (OP 4.09) [XI [ I Cultural Property (OPN 1 1.03, being revised as OP 4.1 1) [XI Involuntary Resettlement (OPIBP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4. I O ) [XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OP/BP 4.37) [XI [ I Projects in Disputed Areas (OP/BP/GP 7.60)* [I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI
[ I
[I
7. Policy Exceptions and Readiness D.7.1. The project complies with a l l applicable Bank policies and there are n o pol icy exceptions requiring management approval.
D.7.2. The project will be ready for implementation at Board Presentation. Core operational and financial staffing appointments have been made; GOSL has allocated adequate budgetary provisions for the current financial year; a financial management system i s in place; the COM and PIP have been prepared and tested in 24 p i lo t GNDs during the preparation. The first year procurement and implementation plans have been prepared and key process steps and institutional arrangements to start the f irst batch o f GNDs have been agreed. A participatory ML&E system has been put in place and i s being tested in the pilots.
a By supporting the proposed project, IDA does not intend to prejudice the j n a l determination of the parties' claims on the disputed areas
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Annex 1: Country and Sector or Program Background
S R I LANKA: Community Development and Livelihood Improvement "Gemi Diriya" Project
Country Profile 1. In the recent past, GOSL has made major efforts to deepen i t s understanding o f the nature and root causes o f poverty in Sri Lanka, with a v iew to reassessing and reformulating i t s policy framework to reduce poverty. As a part o f these efforts, IDA completed two major studies-'Si Lanka: Poverty Assessment" and "Promoting Agncultural and Rural Non-farm Sector Growth". The f irst study concludes that poverty in Sri Lanka i s largely a rural phenomenon. 90% o f those living below poverty level are located in rural areas. 75% o f the total population i s located in rural areas, and 27% o f the rural population lives below poverty level, with the majority being employed in apcul ture. In contrast to the population o f the rural sector, that o f the estate and the urban sector below poverty level accounts for 25% and 12% o f the total respectively. T h e second study highlights a number o f key constraints to the development o f the rural sector, including poor access to critical infrastructure and services, (such as, roads, markets, telecommunications, electricity and banking services), ineffective public sector expenditure programs, poor f low o f information technology, dominance o f public sector as a service provider and underutilization o f private sector interests and initiatives. Despite numerous efforts to reduce poverty, the problem continues to remain high in Sri Lanka with about one-fourth o f the population living below the poverty line. About 7% o f the population l ive o n incomes less than US$1 a day, and 45% l ive under US$2 a day. These estimates do not reflect the poverty status in the north-eastern parts o f the country, where poverty would have worsened due to the on-going c iv i l conflict.
2. The data also suggest the existence o f large regional inequities in poverty incidence with two o f the provinces (Uva and Southern) in the southern part o f country having the highest rural poverty rates in the country. Whi le Sri Lanka has made remarkable progress in the area o f human development over the last decades, regional inequities remain a serious economic and social issue and this may hamper Sr i Lanka's abil ity to meet the Mi l lennium Development Goals (MDG).
Regional Variations in Poverty 3, The latest Household Expenditure and Income Survey (HEIS) data show that at the national level, poverty has increased f rom 20 percent in 1990/91 to 25 percent in 1995/96. The data also suggest that significant regional disparities s t i l l continue to exist despite good macroeconomic performance witnessed during the early 1990s. Except for the Western province, a l l other provinces, including U v a and Southern provinces have experienced a relative worsening o f poverty situation between 1990-96 (Fig 1.1)
Figure 1.1: Incidence o f Poverty by Province, 1985-96
Sources: Datt and Gunewardena (1997) based on 1985/86-1990/91 HEIS: Gunewardena (2000) based on 1995/96 HEIS
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Project Area - Uva and Southern provinces 4. Of the seven provinces for which detailed information on poverty profile i s available, Uva i s the fourth largest one. I t occupies 15% o f the country’s land area and contains 6% o f the total population. Uva province covers Badulla and Moneragala districts and both o f them are entirely rural. In terms o f poverty, Uva shows the highest incidence with about 37% of i t s population below poverty line. Despite the implementation of numerous development programs, Uva province i s continuing to be one o f the most economically backward regions in the country. Mainly due to problems o f accessibility, connectivity, non availability o f quality infrastructure and poor quality o f economic services, Uva i s continuing to be isolated from the rest o f the economy. Production o f primary commodities, mainly seasonal crops and livestock i s the main source of economic sustenance. Access to health and education and other basic services are less than satisfactory. The development o f Uva province i s affected by a number o f economic, and social problems and its overall physical characteristics including hilly terrains, low and long dry spells and absence o f internal road network has accentuated these problems further.
5. The Southern Province, consisting of Hambantota, Matara and Galle districts, shows a significantly high average poverty incidence (27%) along with a high adult illiteracy (11%) with about 60% o f the population having no access to electricity, 35% with no access to safe water and 20% having no access to safe sanitation. However, in terms o f district-wise distribution o f poverty and related indicators, the Southern Province shows a remarkable disparity between districts. Among the three districts, Hambantota i s the most affected by poverty and related problems. It i s located in the arid zone and endowed with the lowest rainfall in the country and hence subject to frequent and prolonged droughts and chronic water shortages. Access to water for drinking and irrigation i s a critical problem, Almost al l o f Hambantota’s population (97%) i s rural and the population i s primarily dependent on production o f seasonal crops and livestock as their main source o f economic sustenance. In addition, Hambantota district also shows a high degree o f economic isolation from the rest o f the country due to remoteness from main markets, poor quality of infrastructure and service provision, poor equity and inclusion. In contrast to Hambantota, the other two districts in the Southern Province (Matara and Galle) are generally endowed with relatively better climatic and other factors. However, in the isolated pockets o f the hinterlands, poverty i s generally rampant. The coastal areas, being closer to main markets and the cities, are better served with infrash-ucture and service facilities.
6. The average monthly income of the project area i s Rs. 5381 or about US$54 (Table 1.1). The income distribution shows a substantial variation across the districts. About 50% the population in the project area lives below poverty l ine (less than US$1 per day).
Table 1.1 Average Household Income in the Project Area
District Avg. Monthly Income (Rs)
Uva Province: Badulla 4634 (US$47) Moneragala 5840 (US$59)
Hambantota 5878 (US$59) Matara 7017 KJS$71)
Southern Province
Galle 5024 (usrssij Source: SLIS: 1999-2000
Developmental Program in the Project Area 7. With a view to improve the livelihoods o f the rural poor in the Uva and Southern provinces, GOSL in the past has provided significant amounts o f funds for implementing a large number of development programs (Table 1.2).
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Table 1.2 Average Annual Public Expenditures for Uva and Southern Provinces 1998-2002
Badulla 588 1,196 Moneragala 1,095 1,815
Sub Total 1,683 3,011 Total 5,580 6,429
Total
1,784 2,910 4,694 15,009
Source: District Secretary office records
8. The analysis o f the total public expenditure incurred during the period 1998-2002 (Table 1.2) for the two provinces for recurrent and capital costs per year averages to about Rs.15 bil l ion. The overall expenditure program i s dominated by agriculture (24%) and the transport (23%) sector. About 45% o f the total expenditure in agriculture was aimed at rehabilitating minor and major irrigation schemes. Social infrastructure provision and improvement accounted for only 15% o f the total public expenditure.
9. GOSL i s also implementing a major welfare and service delivery program, called Samurdhi and in 2002, i s reported to have spent about Rs. 1.6 b i l l ion o n this program (Table 1.3). The program covers a wide range o f sectors including health, education, agriculture, and infrastructure. Despite the channelling of significant amount o f resources, the total number o f Samurdhi recipients in the two provinces during 1998- 2002 has seen only a marginal decline o f 3.4%. In other words, only 14,049 persons (out o f total o f 41 1,776) have benefited and weaned out o f the program. Data relating to the overall physical quality o f life o f the poor in both these provinces confirm that l ivelihood standards among the poor have not experienced appreciable improvements.
Table 1.3 Expenditure Incurred for Samurdhi Program in Uva and Southern provinces, 2003
Source :Ministry of Samurdhi
10. Despite government spending such significant amount o f resources, poverty levels in these two provinces remain virtually unchanged. The non-responsiveness o f the public expenditure programs and their lack o f cost-effectiveness i s a major cause o f concern among key pol icy planners and implementers in Sri Lanka. The volume o f resources currently available to these two provinces i s considerable, and yet, a large share o f resources available under these programs either does not reach the poor, or i s directed to activities that are not among the highest priorities o f the poor, or i s not delivered in a cost effective
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manner. Faced with these challenges, and recognizing the need to try innovative solutions to rural poverty, GOSL has taken a policy decision to address poverty in the country using the CDD approach.
11. Evidence from VSHLI pilot and from international experience shows that CDD i s an effective mechanism to make poverty reduction efforts more demand-responsive, equal and sustainable, complementing market and governmental agencies by achieving immediate and lasting results at the grassroots level. At the same time, VSHLI pilots also suggest that CDD can improve the cost- effectiveness and the efficiency o f services l ike physical and social infrastructure and micro finance. Finally, the direct transfer o f funds to communities has shown to empower communities and increase their social capital.
Lending instrument: Adaptable Program Loan (APL)
12. APL i s chosen recognizing that sustainable community development i s a process and that outcomes o f sustainable poverty reduction cannot be achieved quickly and need a gradual process o f scaling up. Support over a long period o f time i s therefore required. The proposed APL instrument will provide a flexible and long-term horizon under which IDA would commit support for 12 years with a phased approach o f progressive geographic expansion and policy deepening (i.e., the so-called “horizontal” and “vertical” versions o f the APL). The proposed program i s explicitly aimed at scaling up the VSHLI pilot over the 12-year period. The program would also test various strategies to extend the reach o f village communities and local governments, by progressively involving them in proactively seeking funding and participating in decision making in resource allocation over all national and provincial programs. At the end o f the 12-year period, the program would leverage the overall impact o f expected public resources towards poverty reduction. The program would further assist communities to access rural financial institutions, and expand ongoing piloting o f information technology to increase transparency and to link communities directly to markets.
Program Phasing
13. The APL would have three phases. Phase 1 would be implemented in about 1,000 village communities (510 GNDs) o f Uva and Southern provinces, testing further, refining and adapting the experiences and approach developed during the VSHLI pilots. The program will be gradually expanded from the southern districts to include all the poorest parts o f the country. Phases 2 and 3 would cover 800 and 700 GNDs respectively and would begin when readiness criteria for expansion are satisfied. Phase 1 would cost US$51 million, Phase 2 would cost US$70 mil l ion and Phase 3 would cost US$60 million. Phase 1 would focus on empowering communities, developing accountable and demand-responsive local governments, and community federations or networks to develop links with markets (credit, commodity and services). The subsequent phases (Phase 2 and 3) would be initiated independently o f the termination dates o f the previous phase, when readiness criteria for expansion are satisfied. Phase 2 would provide for expanding the geographic coverage o f the program to include other poorest parts o f the country which meet eligibility criteria. The program would be deepened in Phase 1 provinces by enlarging the scale and focusing on institutional change in local governments to become more responsive and on establishing federations and networks. Each phase will be appraised takmg into consideration the experience gained during implementation of the previous ones. This will allow for continuous adjustment to project design, early risk identification, and implementation o f corrective measures before expanding to other phases. During Phase 3 the program would be scaled up through institutions and slulled facilitators and practitioners that worked intensively in Phases 1 and 2. Phase 3 would focus on deepening the program of Phase 2 by ensuring that al l eligible villages are fully engaged. In addition to that, during Phases 2 and 3, the project will invest in procedures and systems leading to increased investment both by public and private sectors in community organizations. During Phases 2 and 3, the project will also invest in
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institutional partnerships to increase the ability o f the communities to bargain, negotiate and add economies of scale. All phases will have the same development objective.
14. Under each phase, there will be three main stages (see Chart 1 below). Stage 1 will focus o n community empowerment. The village communities will have access to a Village Development Fund, with which they can undertake investments in social, economic and community infrastructure. Part o f the Vil lage Development Fund will be allocated to a Loan Fund to enable villagers to engage in income generation activities o f their choice. To be eligible for the funding, communities must agree to the project rules, and proceed through the “project cycle” and thereby satisfy the project that: (i) the decisions taken included broad representation f rom the community; (i) they possess a feasible VDP; and (iii) they are willing and able to contribute a portion o f the cost. Communities will receive technical assistance in, participatory appraisal, community contracting techniques and financial management, to be able to competently manage the Village Development Fund. Stages 2 and 3 will focus on forming federations o f VOs and building partnerships between the local governments, federations o f VOs, the private sector and NGOs to achieve sustainable development. Local governments will receive capacity building assistance as part o f the project, with the ultimate a im o f transferring program execution to them. In this way, the program wil l build the capacity o f local governments to manage development and a system o f intergovernmental fiscal transfers.
Chart 1: Program Implementation over 12 years
Yrl Yr2 Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 YrlO Y r l l Yr12
APL 1 - 510 GNDs ($51.OM) 4 Stage 1 Stage 2 Stage 3
APL 2 - 800 GNDS ($70.OM) Stage 1 Stage 2 Stage 3
APL 3 - 700 GNDs ($60.OM)
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15. related to the satisfactory implementation o f the f irst phase o f the program activities:
Mov ing f rom Phase 1 to Phase 2 will depend o n satisfying the following performance triggers
years o f Phase 1 have accessedvillage Development Funds while complying with rules described in the COM; and have completed at least one sub-project activity
At least 50% o f the members in the project villages covered during the f i rs t two years o f Phase 1 have benefited f rom project interventions; and at least 605 o f these beneficiaries belong to the poorest households as identified b the Maha Sabha. At least 25% o f the divisions covered in the f irst two years o f Phase 1 would have established participatory subcommittees at the Pradeshiya Sabha level with 30% o f elected representative and 70% VOs’ representatives
At least 30% o f women participate in decision-making by holding management positions either as members o f the Board or as members o f VOs in the f i rs t two-years o f Phase 1
At least 50% o f the members o f the project villages covered during the f i rst two years have contributed 20% or more for community infkastructure activities
M I S records, F M S
Management Reports, M I S records
Management Reports, MIS records
Management Reports, M I S records
Management Reports, M I S records
16. The performance triggers for moving to Phase 3 (APL 3) will be related to pol icy and horizontal scaling up o f the program. Policy triggers will refer to the establishment o f institutional arrangements for transfer o f resources and delivery of services following the CDD approach. These triggers would be reviewed and agreed during the preparation of Phase 2 (APL 3).
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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
ADB-funded projects
Southern Province Rural Economic Advancement Project Involvement o f private sector to promote development, accelerate economic growth and create income and employment opportunities Plantation Development Project Improved profitability o f plantation companies and better working and living conditions to estate workers, currently very poor. Aquatic Resource Development and Quality Improvement Support to income generation activities among the poorer sections o f the fisherfolk to improve food security and reduced poverty, especially in rural areas, Tea Development Project Increased income o f tea smallholders and private estates on a sustainable basis and improved institutional environment. IFAD-funded projects 2nd Badulla Integrated Rural Development Project Support to: (1) Community mobilization and institutional strengthening; (ii) Agricultural production; (3) Savings and credit; (iv) Physical infrastructure (minor irrigation and village access roads). Matale Regional Economic Advancement Project Support to: (i) Agricultural and commercial development; (ii) Enterprise Development and Employment; (iii) Enterprise credit. North Central Participatoly Development Project Support to: (i) Social Mobil ization and Participatory Planning; (ii) Water resource development; (iii) Agriculture development; (iv) Storage Processing and Income Generation; (v) Rural Financial Services; (vi) Health and Nutrition. JBIC-funded project Small Scale Infrastructure Rehabilitation and Upgrading Project (SIRUP) Rehabilitation o f small-scale infrastructure to improve quality o f l i fe and socio-economic activities in rural and urban areas GTZ-funded project Northern Rehabilitation Project Focusing on supporting the Katcheris with necessary technical advise and financial assistance. Concentrating o n the communities themselves, their self initiated development and fol low up with infrastructure. It follows a ‘Livelihood Approach to Community Development’ KFW-funded project Augmentation of Ampara, Nawalapiytiya, and Koggala Water Supply Schemes and Sewerage System Project Providing safe and clean drinking water to the people in the area and upgrading the sewerage system in Koggala.
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Recent projects supported by the Bank
Latest Supervision (PSR) Ratings
(Bank-Financed Projects only) Project Sector Issue
Development Objective (DO)
Implementation Progress UP)
S Relevance and Quality o f Undergraduate Education Proj ect(ongoing)
S
S Second Community Water Supply and Sanitation Pro; ect (ongoing) S
National HN/A ids Prevention Project (ongoing) S S
Economic Reform Technical Assistance Project (ongoing) S S
Renewable Energy for Rural Economic Development Project (ongoing) S S
Distance Leaming Initiative Project (ongoing)
S S
S Central Bank Strengthening Project (ongoing) Land Titling and Related Services Project (ongoing) Legal and Judicial Reforms Project (ongoing) North-East Irrigated Agriculture Project (ongoing) General Education Project I1
S I S S I U I U
S
U (ongoing) Mahaweli Restructuring and Rehabilitation Project (closed) National Biodiversity Strategy and Medicinal Plant Project (ongoing)
S u l S S I
I
* S - Satisfactory; U - Unsatisfactoly
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Annex 3: Results Framework and Monitoring
S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
Results Framework
PDO Immoved livelihood and quality o f l i f e o f ;he rural poor
Component One: Village Development Inclusive VOs developed and strengthened and accountable for planning, implementing and managing village development
Outcome Indicators % incremental income increase (including employment) generated from subproject investments
% households benefiting from increased income
% households benefiting from community infrastructure
Component One:
Organizational: 65% o f VOs formally registered, receiving funds and effectively implementing village priorities
60% o f completed sub-projects (ratified by the Maha Sabha) that are operated and maintained by VOs
Inclusion: 50% o f women and youth in decision- making positions (i.e. Chairperson or Treasurer o f various sub-committees), at village level
60% VDPs with at least one sub project activity completed that benefits at least 80% poorest community members (as identified by Maha Sabha)
Transvarencv: 65% o f VOs procuring works, goods and services and managing funds in accordance w i th agreed procedures
Resource Mobilization: 40% o f VOs with viable savings and credit organizations that are covering operating costs
60% beneficiaries contributing to agreed cost sharing for infrastructure sub-
se of Outcome Information
‘omponent One:
idication o f lack o f community Nareness o f and/or c o m t m e n t to iles, lack o f interest on the part o f articipants, inadequate or ineffective ipacity building strategies
idication o f sub-project processing andards and guidelines overly ringent, sub-committees and review ”ittees not aware o f standards and uidelines, possible supply-driven ‘DPs, inadequate processing time for :quests and o f the whole appraisal rocess, and ineffective capacity uilding strategies
lags unclear communication o f rules nd the need for further and more ppropriate trainings and capacity uilding strategies
lags need to evaluate training programs iith the community members and retrain iembers, and need for more andholding especially at the initial :ages
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Component Two: Institutional Strengthening Project teams at various levels, Government agencies, Pradeshiya Sabhas, SOs and the private sector working with the targeted communities are highly sensitized, pro poor and responsive, with capacities to promote C D D
Component Three: Innovation Seed Fund Livelihood options are expanded by scaling up o f innovative pilots
Component Four: Project Management T h e project i s wel l coordinated and managed at national and divisional levels
Component 5: Village Self-Help Learning Initiative VOs federated and generate own resources for future developmental activities through paraprofessional schools and business enterprises
projects
Accountability: 60% VOs whose office bearers maintain satisfactory ratings on an annual basis Component Two :
70% o f VOs receiving support for VDP formation and implementation in accordance with agreed service standards
40% o f appraisal sub-committees at Pradeshiya Sabha level functioning with satisfactory service delivery standards
25% o f VOs earning income from providing paraprofessional services to project and non-project communities
30% o f VOs working in partnership wi th private sector organizations
25% VOs federatedmerged and functioning as business enterprises Component Three:
20% proposals that identify for Seed Funds
20% households adopting innovative practices
Component Four:
70% o f VOs having access to funds in less than two weeks from appraisal/certification o f milestones
60% o f district and divisional facilitation teams receiving positive scores f rom communities through Community Score Cards
4 six-monthly C O M revisions based on feedback from the field and from Independent Audits 75% VDPs completed, operated and maintained by VOs
25% increased household income from project activities
25% o f VOs providing para-professional services to other project and non-project villages
25% VOs federatedmerged and functioning as business enterprises (covering their costs)
Component Two:
Flags ineffective or inadequate capacity o f district, divisional project teams, communities and support organizations and service providers.
Flags need to revisit institutional linkages and coordination between community level and divisional level institutions as well as I E C and system o f incentives at the Pradeshiya Sabha level
Flags necessity to evaluate whether it i s a question o f time or lack o f necessary conditions for VOs to federate
Component Three:
Flags possible poor management o f Innovation Fund
Flags need to change strategy for entry o f private sector in rural areas and possible need to conduct market demand analyses Component Four:
Flags a lack o f understanding o f feedback process, faulty feedback mechanisms, too stringent, inadequate time given to process requests, a lack o f understanding o f sub-proj ect processes, lack o f flexibility and ability to adjust and learn from mistakes.
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Annex 4: Detailed Project Description
S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
Project Area
1. districts (Galle, Matara, Hambantota, Badulla, and Moneragala) o f Uva and Southern provinces.
The project would be implemented in about 1,000 village communities (510 GNDs) in five
Table 1 Basic information of the 5 project districts
Target Population and Selection Criteria
2. approximately 700,000 people (about 20% o f the population o f the two provinces).
The project will cover approximately 150,000 households and i s expected to directly benefit
3. Consistent with the demand-driven nature o f the project, village communities will be included in the project by adopting a self-selection process. The two-stage self-selection process has been developed through a consultative process involving village communities and government officials. During the f i rs t stage, village communities qualifying for project support will be selected based on the following criteria:
Table 2: GND Selection Criteria
I GND Selection criteria I 1. % o f households without al l year round access to drinlung water within 500 meters
% recipients o f Samurdhi welfare benefits % o f landless households
4. % o f households without hygienic latrines
4. In addition, the presence o f development programs during the last three years is also taken into consideration in the selection o f eligible village communties. All the village communities in the project area will be eligible provided they qualify based on the following criteria and agree the project rules.
5. During the second stage, a self-selection process among communities f rom within the qualified village communities will take place. The self-selection process will be based on willingness criteria. Only those communities that agree to the project’s “non-negotiable” principles o f equity, inclusion,
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transparency, accountability, sustainability and good governance (“Golden Rules”) would be eligible for project support. If the number o f eligible village communities i s more that what the project can support, then the village communities will be selected based o n their relative scores in the predetermined selection criteria (Table 2). The qualifying criteria for village communitie are included in the C O M and will be readily accessible to al l stakeholders.
The following are the self-selection criteria:
“Rules of the game”
Table 3: Self-Selection Criteria
Evidence of compliance -
membership organization
Communities are willing to participate in cost-sharing, implementation and O&M of assets created Community members are willing to follow the project “Golden rules”
I
minutes of. the meeting showing participation of men, women and youth Submission of application to the Foundation agreeing to these rules Acceptance and display of the “Golden Rules” in the village
Project Components 6. The project will include the following five components: (A) Village Development; (B) Institutional Strengthening; (C) Innovation Seed Fund; (D) Project Management, and (E) Vil lage Self- Help Learning Initiative. A br ie f description o f the project components i s provided below:
7. Component A - Village Development (US$56.6 million). This component will have two sub- components: (i) Development and Strengthening o f VOs; and (ii) Funding o f Community Sub-projects. VOs will have access to a Village Development Fund to undertake investments in social, economic and community infrastructure. T o be eligible for funding, communities must agree to the project rules, and proceed through the “project cycle” and thereby satisfy the project that: (a) the decisions taken included broad representation from the community; (b) they possess a feasible VDP; and (c) they are willing and able to contribute a portion o f the cost. Vil lage communities will receive technical assistance in participatory appraisal, community contracting techniques and financial management, so that they can competently manage the Village Development Fund. The outcome o f this component i s community- managed infrastructure that i s maintained by the villagers f rom their own resources; and community managed business support systems and funding, especially available to those who cannot access such help f rom outside.
8. The objective o f this subcomponent i s to develop self-reliant, self-managed and sustainable people’s organizations for community development and livelihood improvement in the rural areas. This subcomponent will also promote partnership with the private sector so as to widen the l ivelihood options for the poor and to promote micro enterprise. This will be achieved through promotion of: (i) partnerships with the private sector to support the micro-enterprises; and (ii) demand-driven vocational training facilities to link up j o b opportunities for educated youth. An outcome indicator for this sub-component would be: community- managed sustainable infrastructure, which i s maintained by the community f rom i t s own resources, community-managed business support systems and community-managed Savings and Loans Funds (see below). Activities to be financed under this sub-component will include: (a) facilitation support by the DFT; (b) technical and other support to the communities by resource persons, SOs and other organizations experienced in capacity building o f rural community organizations; (c) workshops and training of community members, VOs and facilitators o n institution building, preparation o f VDPs, preparation and appraisal o f sub-projects, community monitoring, financial management, community procurement and related areas; (d) capacity building o f para-professionals; (e) technical support to set up and manage community information and monitoring centers; (f) technical support t o set up and manage
Al: Development and Strengthening of VOs (US$7.5 million).
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VOs, federations, and savings and credit organizations; (8) support to develop private sector linkages -by organizing “solution days” and topical PRAs; and (h) support to develop linkages with employment agencies by linlung potential youth to employment opportunities prior to s h l l s development training or l ivelihood support funds.
9. A2. Community Sub Projects (US$49.1 million). The bulk o f funds will be transferred directly to the VOs to finance their capacity building and priority investments. The budget will be allocated depending on the population o f the village communities. This sub-component will finance three main activities: (i) Capacity Building Fund; (ii) Community and Social Infrastructure Services Sub-projects; and (iii) Livel ihood Support (LS) Fund. In addition, the subcomponent will include a special reward in the form o f a incentive fund for those VOs that have shown proven results o n the ground in terms o f equity, transparency, good govemance and timely implementation o f village subprojects (see Incentive Fund as described below).
10. A2(i) Capacity Building (CB) Fund. About 10-12% o f the village development funds will be earmarked for capacity building. The objective o f the CB Fund i s to build necessary institutional and human resource competencies and sk i l ls o f VO office bearers and community members so as to empower them to plan, implement and manage village development activities in an efficient, equitable, and sustainable manner. A key outcome o f this support would be sustainable village level institutions built, sk i l l s base developed and communities able to raise and manage revenues independently after the project funds are fully utilized.
11. The Fund would finance activities listed below. Each VO would be expected to develop i t s own rules and guidelines within the broad framework as indicated in the PIP and COM o n h o w to utilize the CB Fund, and allocate funds among the fol lowing eligible activities: (a) setting up o f Vil lage Community Centre and Information and Monitoring cell; (b) VOs’ office management cost; (c) institution building cost; (d) promotion and support to implement community sub-projects; and (e) technical assistance to implement income generating activities. The guidelines would be discussed by each VO during the prioritization process and orientation o f VO members in developing sub-projects and agreed upon by the Maha Sabha before signing of the Capacity Building Fund addendum.
12. A2(ii) Community and Social Infrastructure Activities and Services. The objective o f this sub-component i s to empower communities to manage the execution o f identified infrastructure activities and to expand the scope o f social services already accessible to the communities. I t i s designed to facilitate communities to identify their priority needs for improving the quality o f their lives. The communities will be made aware o f the project appraisal process so that their sub-projects will meet appraisal criteria. Communities will also be assisted in assessing environmental impacts o f sub-projects. This sub-component will finance technical assistance for developing sub-projects o n community and technically and financially feasible social infrastructure activities and services; implementation o f sub- projects; and execution and monitoring o f sub-projects by VOs. Only those community and social infrastructure activities and services that benefit the majority o f households in a particular villagekamlet, especially the poorest and vulnerable groups, would be eligible for funding. The beneficiaries are expected to contribute at least 30% o f the cost o f such activities; 10% o f that would be required in cash. The allocation o f resources to fund the community and social infrastructure would depend o n particular needs and priorities of each community, and may vary f rom village to village. T o help communities select their top most priority(ies), the project team will ensure that topical PRAs and private sector linkages and “solution days” are organized during the development o f VDPs and that communities receive correct information on various options and priorities before they finalize their VDPs. Details about the sub- project cycle and release o f funds are provided in the PIP and COM.
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13. AZ(iii) Livelihood Support Fund. The objective o f the L S Fund i s to improve the livelihoods o f the community members, especially poor women, unemployed youth and the vulnerable members (such as disabled, widows, single mothers and landless) by linking them to employment and income generating opportunities. Part o f the L S fund will be utilized to develop sustainable, micro-finance institutions at the community level enabling villagers to meet their needs for savings and credit services and to assist them in developing a wide range o f income generating activities.
14. The size o f the L S Fund would vary fi-om village to village, and village communities would have the flexibil i ty t o earmark h a l f o f the eligible VDP funds for Livelihood Support activities. The terms and conditions o f accessing L S fund will be agreed through signing o f Addendum - I11 (LS) to the Umbrella Financing Agreement between the Foundation and the VO. The L S sub-component will mainly fund following the three activities:
0 Grants to the Poorest: VOs could provide one time grant to the poorest and most vulnerable in the community l i ke the disabled, widows without any income, single women with small children and without any income, other destitute, etc. to start very small scale income generating activities. The a im o f the sub-component i s to provide support for starting very small scale income generation so that they are able to save and later participate in the normal Savings and Loan Fund (see below) activities o f the VO. This sub-component i s a safeguard against the exclusion o f the most vulnerable who lack the financial capacity to participate in the savings and loan activities. The village community will agree on the rules for selection and amount o f grant. The Grants to the Poorest subcomponent will be implemented by the VO or a designated subcommittee.
0 Skills Development Training: VOs could provide loans to eligible community members, especially t o youth, to acquire slulls, such as, computer literacy, financial accounting, business development, etc. These trainings are expected to provide employment opportunities or to lead to starting a business. This sub-component will also assist the youth with necessary technical assistance for linlung them with employment agencies. The village community will agree on the rules for eligibil i ty and amount o f loans. Since the benefits o f the skill development training will be accruing at the individual level, VOs will extend loans to members under the sub-component. Vil lage communities will decide the rate o f interest to be charged o n such loans, and other terms and conditions o f the loan. The loan would need to be repaid by the members after an in i t ia l moratorium o f one year. The assistance to the VO will be in the form o f a one-time grant, which the VO will use as a revolving fund to extend loans to individual beneficiaries.
0 Savings and Loan Fund: The objective o f the component i s to build a sustainable village-based savings and credit system that will expand opportunities for income generation for people who do not currently have access to loans f rom formal financial institutions and to enhance their access to formal financial institutions as their businesses prosper. This sub-component will assist setting up o f a Vil lage Savings and Credit Organization (VSCO) which a l l villagers will join. The Savings and Loan Fund will be implemented as per the guidelines for savings and loans as adapted by the VO and as approved by MS. The Savings and Loan Fund will help the village poor in starting various income generating activities. Members who need larger loans will be l inked to the formal financial sector. There will be specialized institutional arrangements for implementing Savings and Loan Fund consisting of Small Groups (SGs), Cluster Committees (CCs) and Vil lage Savings and Credit Committee (VSCC) as explained in the rules for implementing Savings and Loan Fund. Crit ical to the success o f this sub-component are: (i) the development o f strong VOs whose members have a deep sense o f ownership and a vision for long-term sustainability; (ii) a governance structure that empowers the members; (iii) transparent guidelines for fund management; and (iv) a reliable accounting and loan traclung system. In order to maximize prospects for long-term sustainability, the project will develop detailed policies and
34
procedures adapted from the V S H L I model, an accounting and loan trackmg system that the villagers can manage themselves and provide extensive high-quality training to communities.
15. The project will assist with the formation and development o f a savings and credit facility that provides incentives for good governance and management, accountability and transparency. The facility wil l be built f rom the bottom up, with small groups o f 5-7 members with similar interests and economic situations. These groups will self-select their members, save together and mutually guarantee each others’ loans. Each group will decide upon a weekly savings amount based on the savings capabilities o f group members. Interest will be paid on these savings based on the interest rate paid by bank where the funds are held and takmg account o f expenses incurred in managing the account. After saving for three months, members will be eligible for loans. The other members o f the small group wil l appraise their loan applications, as they are in a good position to know the capabilities and economic opportunities o f individual members. Small groups will be organized into clusters o f 5-6 groups. The elected cluster office bearers will manage a bank account for the savings o f small group members. Cluster Chairpersons, as wel l as two members o f the Board o f Directors (BOD), will form a Savings and Credit Sub-committee to govern the savings and credit facility, and process loans. The project will introduce sound systems o f financial management so that savings o f members are protected and the real value o f the loan fund maintained. Although loans will be primarily for income generating activities, short-term daily and monthly loans may be used for consumption or emergency purposes, provided that the small group members are confidant that members wil l be able to repay these loans and thus are willing to guarantee them.
16. Members whose credit requirements exceed the maximum loan size will be assisted by the BOD o f the VO to obtain funding from commercial banks. Recognizing that individual VOs may not be successful in developing such linkages, the project will make substantial efforts to develop a framework with one or several banks that addresses s’ risks. Examples o f procedures that could be put in place to mitigate the banks’ r i sk if borrowers do not have adequate collateral include introducing the SG members as co-signers, securing a part o f the loan with SG compulsory savings or developing a partial guarantee facility. The project can also negotiate incentives for the banks, such as having the VO’s Loan Funds deposited at the bank and encouraging VOs to set-up SG savings accounts at a participating bank. The project will provide facilitators, trainers and accounting professionals to help these savings and credit facilities to acquire the capacity and vision to effectively fulfill their responsibility.
17. Incentive Fund: In addition to the Village Development Funds, about 10% o f the total budget envelope for village development would be available as an Incentive Fund, i.e. as a special reward for those VOs that have achieved the agreed milestones. The objective o f the Incentive Fund i s to improve good governance, equity and transparency in the village community as wel l as help with effective implementation of VDP. The Incentive Fund will be in the form o f a special reward, and will be in addition to the per capita budget envelope provided to the village communities. VOs (with 2/3rds approval o f the MS) could uti l ize the Incentive Fund for higher value activities as part o f the federation business activities, or allocate part or a l l o f the funds for other village development priorities that improve the lives of the majority o f poor households. The Incentive Fund will be disbursed after an external evaluation o f the performance o f the VOs for demonstrated good-governance and the achievement o f the following milestones: (i) the VO has implemented community sub-project(s) o n time (as agreed) that have benefited at least 90% o f the community members, and at least one subproject activity has benefited exclusively the vulnerable group (disabled, widows, single mothers, unemployed youth etc) as identified under the Grants to the Poorest subcomponent. The quality o f the infrastructure sub-project has been certified by the Appraisal and Monitor ing Team as o f satisfactory quality, and the sub-project(s) i s being operated and managed by the community members with their own funds; (ii) the VO has mobilized its own savings (minimum Rs.500,000) fi-om i t s community members, sub-project savings, profits fi-om any business opportunities and interest generated through Savings and Loan Fund
35
and deposited in a bank account, and has raised external funds (minimum Rs.1 mi l l ion) f rom the banks and outside agencies for village development; (iii) the VO has disbursed grants to the poorest eligible beneficiaries as approved by the MS and brought at least 80% o f beneficiaries into Savings and Loan groups; (iv) VO has elected at least 50% o f women to decision malung position such as Chairpersons and Treasures (in BOD, Procurement Committee, Financial committee, social audit committee, Sub-Project Committees (SPCs), etc; (v) the VO has trained eight or more community members as para-professionals (as agreed in the Capacity Building Plan) and 50% o f the paraprofessionals are women; (vi) the VO has disbursed 75% or more o f Savings and Loan Fund and maintained 95% o f the repayment rate o n the Savings and Loans fund and maintained portfolio at risk 30 days or less than 5% o n the Loan Fund; (vii) satisfactory ratings o f office bearers (BOD, Procurement and Financial committees, and SPCs) o f the VO through Report Card systems and Social Audit Committee Reports (certifying compliance with Gemi Di r iya rules) have been maintained throughout the VDP planning and implementation (at least on an annual basis); and (viii) the VO has maintained a l l books o f accounts and financial and procurement records up to date, BOD has submitted financial statements every year, and held M S meetings o n a regular basis as agreed (evidenced through minutes o f the meetings).
18. Component B: Institutional Strengthening (US$6.0 million). The objective o f this component i s to encourage the establishment o f highly sensitized, pro poor and responsive Project teams, Government agencies, PSs, SOs and the private sector, with capacities to promote CDD. This would consist o f building capacities o f the local and national agencies and SOs to effectively facilitate implementation o f the program and broaden the skills base o f these agencies on participatory development and information sharing as wel l as develop a ML&E system to capture results o n the ground and respond to the needs and demands o f the community. The component will include introduction o f social and public accountability mechanisms, l ike participatory budgeting, community report cards, social audit and expenditure tracking to trigger changes in responsiveness and accountability among local government institutions and communities. The component will finance training, workshops, technical assistance, exposure visits, and goods. The outcome o f the component would be responsive and accountable local and national agencies and SOs.
19. B1. Capacity Building of National, District and Divisional Project Teams: The objective o f this sub-component i s to develop a shared vision and build required competencies among project teams at national, district and divisional levels to enable them to perform their respective roles. T h i s will be achieved by promoting experiential learning, exposure to best practices and learning by doing experiences. The project wil l identify the mix o f skil ls, attitudes, and orientation required for the project teams, the l ine agencies, PSs, SOs and the private sector to respond to the needs o f rural communities. The focus shall be o n the role these agencies can meaningfully play to nurture and empower rural communities. Project teams will receive intensive training o n social mobilization, community participation, social capital, CBOs, micro-finance institutions, VDPs, environment management and ML&E. The l ine departments will receive training o n h o w to give space to the VOs in the development agenda and o n improving the quality o f services to be provided to the rural poor. The PSs wil l be facilitated to actively participate in the program and their capacities will be built to gradually replace the project teams and take over management o f the program (Phase 2).
20. B2. Capacity Building o f Support Organizations and Service Providers: The objective o f this sub-component i s to facilitate the active participation o f SOs and the private sector to expand livelihood options o f the poor. The project will identify the SOs and service providers with considerable experience in nurturing CDD and organize their exposure to project initiatives and facilitate their interaction with VOs to establish linkages and partnerships.
21. B3. Monitoring and Learning: The objective o f this sub-component i s t o monitor performance and progress o f the project and to disseminate it among a l l stakeholders to enable them to effectively
36
address project implementation issues. The sub-component will finance establishment and strengthening o f a ML&E system that will serve the needs o f project agencies at a l l levels. The information wil l f low from community members to the project director through the divisional coordinator interfacing with divisional secretaries and service providers. The format for monitoring records wil l be designed with the participation o f various stakeholders. Participatory techniques l ike beneficiaries' self assessments, focus groups and key informant discussions will particularly be used for process monitoring, on issues related to the evolution o f sub-projects, their inclusiveness, transparency and the level o f participation in project benefits and in decision-malung processes. Process monitoring will be carried out by an external agency. The ML&E coordinator f rom the project team will anchor al l related activities, such as baseline survey, MIS, process monitoring, fo l low up studies, impact evaluation and community monitoring.
22. Component C: Innovation Seed Fund (US$l.S million). The objective o f this component i s to pi lot innovative ideas, which need experimentation, learning and incubation and have the potential for being scaled-up and replicated. Proposals for innovative ideas would be selected through a screening process that would favor linkages with the private sector and research institutions. Some ideas currently under consideration under this component include technology and product development related to agricultural processing and value addition (including development o f commodity value chains for producers) and information technology and computer education applications in collaboration with other development initiatives, l ike the E-Lanka initiative and U v a Community Radio and PS Incentive Fund. It i s envisaged that additional activities would be identified during implementation and selected with a competitive process through a screening committee consisting o f experts f rom the private and public sector and research institutions.
23. Component D: Project Management (US$4.7 million). The main objective o f this component i s to facilitate overall co-ordination and management o f the project at national and divisional levels. The component will finance goods, services and recurrent costs.
24. Component E: Village Self-Help Learning Initiative (US$l.O million). The V S H L I pi lot was initiated in year 2000 under an IDA-supported project (MW), to test an innovative pi lot o f transferring power and decision making to the communities. The pi lot has successfully demonstrated that given the participatory framework, communities can articulate their needs and priorities; develop and implement infrastructure and income generating programs and take responsibility for operating and maintaining the assets created. The pi lot i s being implemented in Mahaweli and non-Mahaweli areas in Polonnaruwa district. With the closing o f M W project in December 2003, the p i lo t will be included under the proposed project and will fund completion o f the remaining VDPs in the pi lot villages. The component, in addition to finding village priorities, will further strengthen institutional arrangements at the local level by developing a para-professional and village federation model, and link these institutions with public and private sector agencies. The component will be managed separately to continuously learn lessons and to apply them to the Gemi Di r iya project.
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Annex 5: Project Costs S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
Local US$ Foreign US$ Total US$ Mil l ion Mil l ion Mil l ion Project Cost B y Component
Village Development 49.5 0.0 49.5 Institutional Strengthening 4.1 1.6 5.7 Innovation Seed Fund 0.7 0.6 1.3 Project Management 4.0 0.4 4.4 VSHLI Pilot 1 .o 0.0 1 .o Total Base Cost 59.3 2.6 61.9
Physical Contingencies 2.3 0.0 2.3 Price Contingencies 5 .O 0.6 5.6
Total Project Costs’ 66.6 3.2 69.8
‘Identifiable taxes and duties are US$7.6 million, and the total project cost, net o f taxes, i s US$62.2 million. Therefore, the share o f project cost net o f taxes i s 90%.
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Annex 6: Implementation Arrangements
SRT LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
1. The proposed implementation arrangements are based o n an institutional model in which: (i) VOs will be the focal point; (ii) the institutions at a l l levels would enjoy independence and autonomy to ensure compliance with the “Golden rules” and the “rules o f the game”; and (iii) communities are allowed to participate in a way that ensures their ownership and total independence in taking decisions and managing resources. The envisaged institutional model i s clearly l inked to the programmatic approach o f the project. Recognizing that holistic development i s a long process, the model i s based on the following principles: (i) team effort, (ii) devolution o f responsibilities; and (iii) participation o f local government for sustainability .
Table 1: Gemi Diriya institutional model
INTER MINISTERIAL COORDINATION COMMITTEE-National Level Chaired By Minister (Samurdhi)
~ G E M DIRIYA FOUNDATION (GDF) National Level 1
GD MANAGEMENT TEAM Village Institutions Unit
Business&Livelihood Development Unit Project Management Support Unit
APPRAISAL AND MONITORING
FACILITATION TEAMS
SUB-COMMITTEES/ DIVISIONAL
FACILITATION TEAMS
Institutional Arrangements at Village Level
2. The following chart shows the institutional arrangements at the village level (details are provided in the PIP and COM). The focus i s o n creating a sustainable and participatory institutional structure that ensures responsive, inclusive, accountable and efficient governance for project implementation.
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Maha Sabha. or Village Assembly: All the households in the community would become members o f their Village Assembly (or any other form o f organization at the village/GND level). T h i s general body will be called “Maha Sabha”. The community would include everyone over 18 years.
Village Organization (YO): This will be constituted under the Companies Act, and consist o f the MS, a BOD, and various committees (Finance Committee, Social Audit Committee, Village Savings and Credit Committee, SPCs and Procurement Committee). VOs will be responsible for the following activities: planning, implementation and supervision o f sub projects, management o f funds, procurement o f goods, services and works, operation and maintenance o f community assets, self-monitoring for cost effectiveness and sustainability.
Federation of VOs: All VOs within a GND will be organized into Federations in order to achieve optimum scale o f operation, particularly in income generating programs, and to establish direct partnership with the private and public sectors.
Table 2: Village level arrangements
BOARD OF 1 DIRECTORS
COhfMITTEE COM’ lTEE COMiVITTEE COMMlTTEE
Institutional Arrangements at the Divisional and PS Level: 3. Community development and livelihood improvement o f the rural poor activities cannot be managed from Colombo. Hence, appropriate mechanisms to closely integrate district and divisional teams with the management team at the national level are a critical need. Two key functions that the Foundation will devolve are: (i) appraisal o f community sub-projects and monitoring implementation progress; and (ii) facilitation and technical support. Appraisal and monitoring functions will be devolved to the two teams at the provincial level, while facilitation functions will be devolved to district and divisional facilitation teams.
4. Divisional Facilitation Teams (DFT): DFTs will facilitate and assist communities in planning, implementation, monitoring, analyzing and adjusting the project. Their roles will mainly include promotion and guarding o f program principles at the divisional level, assist in the self-selection o f GNDs, help VOs to secure services fi-om SOs and other service providers, provide technical assistance as and when requested by VOs, review implementation progress, help VOs in removing hindrances to project implementation, and resolve conflicts.
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5. Composition o f the DFTs:
Divis ional Secretary (DS) Chairperson o f PS sub-committee Representative o f the D S office (Team Convener) T w o technical officers (engmeer and apcul ture) One representative f rom Samurdhi (gender coordinator) Accountant Sub-divisional facilitator (finance) Sub-divisional facilitator (general) T w o officers (support services) f rom D S office.
6. Pradeshiva Sabha Sub-committee: In order to build the capacity o f local govemment to respond to the needs o f the communities, the project would help establish a PS sub-committee comprising 30 % o f PS members and 70 % VO’s representatives. The roles o f PS sub-committees wil l evolve over time. During the first stage, sub-committees will coordinate program implementation, mainstream technical and other available expertise for VOs, and monitor progress o f implementation. During the second stage, the sub-committee will take the role o f the Appraisal and Supervision Teams at the provincial level. Their responsibilities would include: appraisal and approval o f VDPs and sub-project proposals and certification o f milestones for release o f funds to VOs. During the third stage, the sub-committee will additionally rotate funds to the communities (detailed functions and roles o f the PS sub-committee are provided later in the section).
Institutional Arrangements at the District level:
7. District Facilitation Teams fDrFT1: DrFTs would be responsible for the promotion and guarding of the program principles at the district level. Their main activities would include assisting the self selection o f GNDs, preparing a roster o f service providers, providing technical assistance/service support, facilitating linkage with private sector, converging and linking with other projects, reviewing progress and resolving conflicts.
8. Composition o f the DrFT
0 Government Agent/DS 0
0
Representative o f the PS sub-committee One officer selected (jointly by the D S and the Foundation) o n the basis o f hisher contribution to the principles o f the Foundation and capacity to contribute to the project (Coordinator) T w o technical officers with competence to provide assistance to the development o f sub-projects; One Samurdhi officer selected by the D S and the Foundation based o n criteria established by the Foundation; One representatives each from the NGOs and the private sector
Institutional Arrangements at the National level:
Inter-Ministerial Committee
9. Chaired by the Ministry of Agriculture, Livestock and Samurdhi (MALS), the committee i s also composed by the Ministers of Rural Economy, Mahaweli, Central Development, Southem Development, Planning and Finance. The committee plays an advisory and overall monitoring role.
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GEMI DIRlYA Foundation (Foundation)
10. Chaired by a Cabinet level secretary, the Foundation i s a non-profit company to be established under the Companies Act. The Foundation would review project progress, resolve impediments, sanction annual plans, provide policy reforms and strategic support, and act as guardian o f rules.
There will be a nine member general body. General body members would include: Secretary Samurdhi Secretary, MRE Senior Representatives o f the Ministry o f Planning and Finance (one f rom each Ministry) One nationally reputed practitioner o f community based rural development One reputed private sector representatives with business linkages in the rural areas One reputed banker f rom private sector banks with rural branch network One representative f rom academia who has extensive research experience in rural development and poverty assessment CEO o f the Foundation
F rom this pool o f general members, there would be a seven member governing body comprising o f the following:
Secretary Samurdhi (Chair) Secretary, MRE
CEO o f the Foundation
Senior Representatives o f the Ministry o f Planning and Finance (one f rom each Ministry) One nationally reputed practitioner o f community based rural development One reputed private sector representatives with business linkages in the rural areas;
13. The members o f the general and governing bodies who are not ex-officio would ho ld the position for two years and can be elected for two terms. The first governing body would be selected by GOSL. The details o f the membership and functioning o f the Foundation are provided by the Memorandum and Articles o f Associations. The general body will meet at least once a year and the governing body at least once a month.
Gemi Diriva Management Team (Management Team)
14. The Management Team would be headed by a CEO - the Project Director. Besides appraisaVmonitoring and facilitation, other key functions that are essential to implement this program include: policy formulation, advocacy, strategic communication, building linkages with other government agencies and private sector organizations, management o f program funds, capacity building o f the management and implementation teams at various levels, service providers and support organizations, guardian o f rules, coordination, facilitation, appraisal, monitoring and evaluation. Facilitation functions will be delegated at the district and divisional level, whi le the appraisal and monitoring functions will be devolved at the provincial level. All other functions will be directly carried out by the Management Team, divided into three teams. Each o f the three teams would be headed by a team leader and would have the following functional units: (1) Vil lage Institutions Unit; (2) Business and Livelihood Development Team; and (3) Project Management Support Unit. Continuation o f Management Unit members will depend upon the results o f output-based performance evaluations.
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Table 3: GEM1 DIRIYA Foundation
~ Chief Executive Officer
, I
I
Management Team
Village Institutions Unit
Institutional development ParticipatiodSocial Capacity building Gender Information and strategic communication
Business and Livelihood Development Unit Micro-Finance Technology -Water supply and agribusiness development
development and linkages
Business enterprise
Project Management Support Unit
Financial management Procurement M&E MIS General administration
Appraisal and Monitoring ( A M ) Teams (provincial level)/PS sub-committees (divisional level)
15. Each province will have one A&M Team. Communities will develop sub-projects that need to be appraised to evaluate their quality, to verify whether they meet environmental and other standards, to check the feasibility o f implementation and whether they have followed the Golden rules and the project rules. The institutional arrangements for the appraisal process a im at building the capacity o f local governments and creating an enabling environment for them to respond to the community demands. This would be achieved gradually in three stages. As mentioned above, during the first stage, A&M Teams at provincial level will appraise sub-projects (with the exception o f savings and credit facilities), certify milestones, and act as guardians o f the rules. The main objective o f this model -technical teams worlung directly with communities - i s t o ensure a widespread empowerment o f communities (by being in the driving seat o f selection, preparation and direct use o f financial resources and implementation). Once this process o f empowerment i s completed, the role o f the A&M Teams at the provincial level would change, and their appraisal functions would be devolved to the local level authorities to ensure institutional sustainability. During Phase 2, screening and appraisal functions would be carried out by a participatory institutional sub-committee at the PS level consisting o f 70% VOs’ representatives and 30% local elected officials f rom executive and legislative branches. The A&M Teams will change their functions f rom appraisal o f subproject proposals to the monitoring and supervising o f the process whi le providing technical support to the PS sub-committee. During Phase 3, the local participatory body not only approves/appraises the subprojects but also receives an envelope o f money to be managed locally. Phase 3 will start when PS sub-committees demonstrate consistent participatory and transparent decision- malung processes and capacity to take decisions about other govemment programs using a similar approach.
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Table 4: A Summary of the Roles and Responsibilities o f the institutions at all Levels
Levels
Inter-Ministerial Committee
Gemi Diriya Foundation Board
Gemi Dir iya Management Team
Appraisal and Monitoring Teams
Roles and Responsibilities
Advisory and inter-ministerial coordination Policy formulation regarding CDD and livelihood strategies; Strategic support to the program
0 Articulation o f a clear vision for the Foundation Overall monitoring and coordination Resolution o f issues and problems highlighted by the Management team Strategic support to the Management team
0 Providing information on program implementation, and raising issues for resolution Ensuring that the Gemi Diriya principles o f the project are complied with Approval o f annual work program and budget o f the Foundation Ensuring that performance indicators for the triggers for the subsequent phases o f the APL are achieved Recruitment o f the CEO o f the Foundation as per the Articles o f Association
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Recruitment o f the core management national team, appraisal and monitoring teams at the provincial levels, and support organizations to provide facilitation to the communities Preparation o f the various operational guidelines on finance, procurement, fund flows, community operational manual Preparation o f IEC materials and disseminatiodpromotion at national level among various stakeholders Preparation o f the business development plans and annual budgets Preparation o f capacity building strategies, training modules for capacity building Financial management and audit MIS and impact evaluations Coordination o f the activities at provincial, district, divisional and community levels Maintaining linkages with various government agencies involved in rural development, training institutes, chambers o f commerce and industry, banks, research organizations and other networks and bodies which could provide support to the communities Maintain a rosteddata o f service providers Knowledge Management Maintain service standards for support to the communities Prepare checklist for appraisal and develop monitoring indicators Selection o f the GNDs in consultation with district teams Continuous coaching and mentoring o f district and divisional teams Carry out desk and field appraisal o f sub-projects Certification o f milestones for approval o f sub-projects and release o f funds Maintain database on program monitoring and prepare monitoring reports for the national team
0
0
0
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District Facilitation Teams
Divisional/PS levels
Vil lage Organization
0
0
Dissemination o f the golden rules and monitoring compliance Selection o f the GNDs in consultation with Management Team and PSs
a
0
0
- 0
a
a
a
0
0
0
Assessing service providers and maintaining a roster o f competent service providers Providing technical support to the communities either f rom the public sector agencies or f rom outside Developing linkages with other development programs, private sector and banks Promoting and acting as guardians o f the golden rules and principles Selection o f GNDs in coordination with Samurdhi based on criteria established under the project Assessing competencies o f various service providers available locally Facilitating the provision o f services required by the VOs f rom either public agencies or the private sector Arranging and providing technical support for communities Monitoring Resolving problems faced by the communities
0
0
Reviewing-the performance o f the project at the Divisional/PS level As outlined in the COM, mainly
o o Managing funds o o o o
Fund allocation within various priorities
Planning and priorit izing f village investments Implementation o f various VDP activities Procurement o f works, goods and services Monitoring o f progress within a village
and certification o f milestones and triggers , o Signing o f various financing agreements with the Foundation
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Scaling up Strategies, Sustainability and Capacity Building
Scaling Up Strategies
16. The distinct feature o f the project i s that i t i s based on the four-year V S H L I experience and o n the hands-on leaming phase piloted in 24 GNDs in the project areas. The lessons learned are expected to steer the project implementation in about 100 GN Divisions in the f i rs t year and in about 200 GN Divisions during the 2nd and 3rd year. In order to cope with the challenges inherent in such scaling up operations, the project has evolved a very clear scaling up strategy. The strategy aims to ensure that there i s n o dilution in the focus and that the program objectives are realized. The project would use the following mechanisms for scaling up:
Investment in increasing the capacity of national, district and divisional level government, SOs and service providers for community mobilization and facilitation.
Members o f successful VOs and other community members wil l be trained as para-professionals to take some responsibilities for facilitation, mobilization and training. The pilots have shown that villagers are the best resource to promote and disseminate information. They would be accountable to VOs and their incentives would be performance based.
VOs would be encouraged to develop networks and federations that could take up the responsibility o f scaling up the program. Mature associations which have shown good performance will be rewarded and motivated by giving them a responsibility to mobilize, mentor and coach new and neighboring ones to enable lateral spread and peer leaming.
National, District and Divisional Facilitation Teams wil l have their capacity increased to be better facilitators o f participatory processes and be more responsive and accountable.
Development o f IEC material highlighting the impact o f using these approaches and the process followed would enable information exchange and creating demand for these approaches.
Efforts would be made to locate competent SOs with technical ski l ls , technical colleges with relevant disciplines and other private service providers and increase their abil ity t o provide support to communities in a demand-driven manner.
The project envisages a process through which communities would be able to procure a range o f services using community contracting and procurement for implementation o f the activities identified in their VDPs. Developing a large pool o f service providers who work in rural areas, are accountable to the community, are paid by the community and deliver quality services i s a big challenge for the project.
Communication material, training modules, PRA tools, processes such as village development planning, sub-proj ect preparation and appraisal and monitoring tools will be standardized and made available for use in the new villages.
Role of Sewice Providers
17. The project's main challenges are to build capacity at various levels to develop a large pool o f service providers and networks who could work in rural areas, are accountable to the communities, are contracted by the village organizations and deliver quality services o n a timely basis. T o address these
46
challenges, the project would encourage partnerships between VOs and service providers by: (i) developing a cadre of community level service providers - para- professionals; (ii) building capacity o f public service providers to deliver services in a demand-driven manner; (iii) facilitating interaction between private sector service providers and communities to expose the private sector to various opportunities and also develop partnerships wherein private sector provides service to rural communities at a reasonable cost; (iv) developing capacity o f SOs that would move f rom village to village and provide catalytic inputs; (v) hiring o f umbrella capacity building agency(ies) that would build capacity and mentor and coach communities, district and divisional teams and SOs.
18.
0
0
0
0
0
In addition, the project would focus on:
Investing in improving the quality and quantity o f service providers available to the community through organization o f “solution days” (vendor development) and invest in promoting direct interaction between the village organization and other service providers o n an intensive and regular basis.
Linkmg savings, credit and enterprise development in the l ivelihood support program.
Combining both self-employment and j o b employment (through s h l l development component) as part o f l ivelihood promotion.
Linking financial institutions l ike Banks and insurance service providers with communities f rom the beginning as part o f solution days so that they reduce their risk perception about village companies.
Using PSs to take up certain roles in promotion, mobilization and service provision so that this could be replicated across the whole area without significant external facilitation over a period o f time
Role of Support Organizations (SO)
19. Based o n the experience of the V S H L I and other pilots, i t i s clear that demand for project services would not be an issue. By contrast, the supply side may be a problem. Communities would need assistance with social mobilization, institutional development, financial management, identifying employment and business development opportunities, building technical capacity o f para-professionals etc. These services cannot be provided by the Foundation and govemment agencies in a cost-effective and sustainable way. The Foundation would therefore need to identify competent SOs. For the purpose o f the project, SO include NGOs, CBOs, private sector business organizations and technical and training organizations. The roles of SOs would range from facilitation (technical, social) to capacity building, development o f business opportunities in the communities etc. I t i s important that the SOs are oriented to the philosophy, vision and operating principles o f the Foundation and the program. The Foundation should be able to come up with unconventional solutions to conventional and unconventional problems and would need to invest considerable effort to enhance the quality o f SOs through sharing knowledge of best practices, exposure to new, innovative programs, and establish a minimum threshold for quality performance.
20. In order to ensure that SOs provide the best possible services, i t i s important that the service contracts be performance-based, with clear terms o f reference and deliverables. The triggers for payment should be based on simple measurable milestones and community feedbackkertification o n the performance o f the SO would be an important indicator for payment for services.
47
Cauacity Building
Pradeshiya Sabhas (PS) level
2 1. are expected to take up following roles in the project in the initial phases:
The project would actively promote and build capacity o f PS functionaries and institution. PSs
e
e
e
Communicating the rules o f the game to village communities and supporting social mobilization and community organization. Providing technical functionaries to act as service providers to the community organization for some community infrastructure projects, especially water. Reviewing the performance o f the project at PS and Divisional level.
22. The project would invest in capacity building o f PS functionaries on ru les o f the game, village development planning, technical service provision and financial management. This would enable them to take up a more prominent role in future as facilitators, guardians o f rules o f the game and technical service providers when the program i s scaled-up in larger number o f villages.
Piloting of Incentive Fund for Pradeshiya Sabhas
23. In addition, i t i s proposed that the project would work with some PSs selected through a competitive process for improving local governance and service delivery systems. These would involve capacity building o f PS functionaries in participatory budgeting and planning, financial management, revenue mobilization, monitoring and other management aspects. They would also be provided some block funding to improve their institutional and service delivery performance. The lessons learnt from this work with PSs would be used for deciding the scope, nature and size o f future work by the Project in improving local governance.
Village and Inter Village Level
24. At the village level, the VOs would mobilize community members from al l sections o f society, undertake participatory village development planning and implement the various activities identified for support under the program. In addition, they would manage and supervise community asserts created under the project and promote various types o f livelihood support activities. VOs would also promote sk i l l development among youth, women and other groups to access job employment opportunities in service sector - by creating a good pool o f para- professionals at the community level who provide good quality services to community members and access information and expertise from outside agencies including the private sector.
25. In the long run, the VO would become a major economic and livelihood support organization for the village. I t would promote a village saving and credit organization and undertake many livelihood support activities for various common interest groups. I t would develop a financial base with i t s own savings and undertake various activities related to marketing and value addition.
Federations of Village Organizations
26. The VO would also network with other villages in the form o f a inter-village federations to provide services in a cost-effective manner and achieve economies o f scale with respect to marketing, value addition and other aspects. The federation would also function as an effective support institution for providing different kmds o f expertise to VO. In the long-term, the VO would develop linkages with the private sector, public institutions and other service providers and develop sk i l ls o f negotiating with them,
48
accessing services and expertise in a effective and responsive manner. VOs would also ensure that financial resources are available f rom Banks for investments in livelihood development and diversification by ensuring high repayment rates f rom i t s own, project and Bank resources.
Project Cycle and Village Development Cycle
27. PIP outlines the project cycle and sub-project cycle specifying key steps and sequencing o f activities to be performed in implementing the project. This will enable al l partner institutions and other stakeholders to understand and agree upon critical activities and their timing, duration and interdependence for ensuring successful project implementation. At village level, the sub-project cycle involves five key steps, which are planned and implemented by communities o n their own initiative: (i) start up/dissemination o f information; (ii) pre-planning; (iii) planning; (iv) community implementation; and (v) completion.
28. The Vil lage Development Cycle would consist o f the following steps:
0 Start-upPromotiona1 Phase: This involves communication o f the rules o f the game and the key institutional aspects o f the project at the village level. This phase i s l ikely to be handled by the divisional facilitating team, sub-divisional facilitators and SOs. This team would also facilitate collective action through small groups before formation o f the VO. Special efforts would be required to bring the poor and vulnerable groups into the mobilization process. The outcome o f this phase i s communities that have been sensitized to rules o f the game, roles and responsibilities, the process, and i ts equity orientation.
0 Pre-planning Phase: T h i s phase involves setting up o f a VO and selection o f the BOD. It also involves conducting in i t ia l needs assessments and identifying key activities, which could be taken up for capacity building, community infrastructure development and livelihood support. At this stage, resource envelopes are known to the community. The VO also selects various operational committees and para-professionals in key areas. Vil lage functionaries attend in i t ia l capacity building programs and develop a capacity building plan. A memorandum o f understanding i s signed between the Foundation and the village organization and the f i rs t installment o f capacity building fund i s released to the village organization.
0 Planning Phase: T h i s phase mainly consists o f the finalization o f the VDP and the preparation of sub-projects. In order to ensure the good quality o f VDPs, “solution days” would be organized by the Foundation in a cluster o f villages to enable private sector enterprises, service providers and financial agencies to directly interact with VOs and community members. During these “solution days”, VOs and community members exchange information about l ivelihood opportunities, s l u l l development opportunities, and possibilities in terms o f technologies and design. Based o n information and advice collected at the “solution days”, VOs would refine and detail their VDPs. In order to develop detailed estimates o f costs and activities and prepare sub- projects, village organizations could engage service providers using their capacity building fund. The VSCC would also be formed at this stage along with the mobil ization o f savings groups. The outcome o f this phase i s a good quality VDP, good quality sub-projects and a trained cadre o f functionaries at the village level. Vil lage organizations would thus be ready to access resources and to implement their sub-projects.
0 Implementation Phase: During this period the various sub-projects would be implemented, including community infrastructure projects and livelihood support activities (through the savings-credit mechanism). The focus would be o n good quality supervision, transparency and
49
accountability, and community procurement in case o f community infrastructure projects. The capacity building fund would be used to develop capacities in this respect. In case o f l ivelihood support, the focus would be on building a good financial institution with high repayment rate and speed o f revolution o f the revolving fund. Livelihood support activities would be ongoing and efforts should be made to increase the speed o f revolution in the revolving fund so that more households are benefited. At the same time, the focus should be o n developing market linkages and developing value addition through training communities in grading their produce and accessing private sector to get higher prices. At the same time the s l u l l development component should be strengthened to create j o b employment opportunities for the youth. The biggest challenge during this phase would be access to good quality service providers for the VO. The outcome o f this phase would be a functional and vibrant VO, capable o f allocating and spending funds efficiently and effectively, with confidence, knowledge and sk i l ls to access other expertise and resources. Self-monitoring and development o f accountability between service providers and VOs would be a key aspect o f the program.
e Completion (Self-reliance and Sustainability) Phase: During this phase the focus would be o n increasing the sustainability and viabil ity o f both VOs and community assets created under the project. Each village would be encouraged to develop a sustainability p lan which includes collection o f O&M charges for community assets, service fees for various services rendered and a plan for meeting operational expenses for the VO. VOs should also be able to identify collective activities for l ivelihood enhancement and should access resources from financial institutions for this purpose. The Vil lage Savings and Credit Committee should have revolved various cycles and generated enough internal resources to service the needs o f members and should be able to access resources f rom Banks for future l ivelihood expansion and diversification. The activities envisaged could be funded through the Incentive Fund available to VOs that perform well. Activities related to l ivelihood support for value addition may be taken during this period. The focus o f capacity building activities would shift to building linkages with private sector and Banks and independent resource mobilization by these agencies.
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OVERALL PROJECT CYCLE
Start up Phase (National level)
Phase (District and Divisional level)
Phase (Vil lage level)
Planning Phase
Phase
Appoint and train DrFTs
Appoint and train National Team (Foundation)
Sign Subsidiary Grant Agreement with GOSL
Conduct IEC campaign at divisional and village level Train DFTs o n COM Facilitate self-selection o f Vi l lage communities/ GNDs In i t ia l capacity building o f GNDs, communities and other stakeholders Select and train SOs Assist VOs in priorit ization and budget allocation Enlist and train service providers Document vil lage resource and baseline situation using participatory methods Signing Umbrel la Financing Agreement and Addendum-I - Capacity Building Fund Discuss various legal options for registering the VO Register the VO under relevant Act. Elect BOD'S and sub-committees' office bearers Tra in office bearers in COM Organize exposure visits to best practices for office bearers Open bank accounts H i re technical assistance to develop sub- project proposals Developing sup-project proposals Sign Addenda I1 and I11 o f the Financing Agreement Submit proposals for Maha Sabha approval and A&M Team appraisal Mobi l iz ing community contribution Receive lst installment Capacity Building Fund Conduct refresher courses in COM for office bearers
Tra in O&M committee
Contract technical service providers and private sector for business opportunities BOD sign contract with sub-project committee Procure goods, services and works for sub- projects Mobi l ize labor and material contribution
Milestonesltn'ggers for Moving 7 on to the Next Phase *
National Team
DrFTs trained Subsidiary Grant Agreement with GOSL signed DFTs trained in COM SOs recruited and trained Service providers trained
trained
VO formed with at least 50% o f the households and 50% o f the poor in the village enrolled as members Umbrel la Financing Agreement and Addendum-I - Capacity Building Fund signed
a
a
a
- a
a
a
a
Umbrel la Financing Agreement Addendum- I, I1 and I11 signed Sub-proj ect proposals developed, approved by Maha Sabha and appraised by A&M Team First installment released Refresher courses in COM for off ice bearers conducted Sub-projects commissioned Milestones achieved and certif ied by A&M Team Second and third installments released Balance o f community contribution mobil ized
51
Post-Completion Phase
Conducting periodical social audits and report card feedback Prepare Implementation Completion report, submit to Maha Sabha for approval and publish it
Collect O&M contribution Implement O&M activities Networking with other villages and federating for establishing linkages Partner with private sector in business ventures
I
Implementation Completion Reports and Social Audit Reports approved by Maha Sabha
O&M subcommittee
Sub-projects operated trained
and maintained with community contribution Revenues generated through employment and income generating activities
52
VILLAGE DEVELOPMENT CYCLE
PRE-PLANNING PHASE
Planning Phase
~
Planning Phase: Preparation
Planning Phase: Appraisal
Planning Phase: Micro Credit & IGA
Implementation Phase
Organize small groups (SGs) Raise project awareness Form Village Organization Appoint Board o f Directors Form sub-committees Open bank account Conduct preliminary PRA, baseline survey and prioritization o f village development activities Sign Umbrella Financing Agreement and capacity Building Fund Addendum Receive 1 s t installment Capacity building fund Train office bearers in Module 1 (COM) Draft VDP and preliminary budget allocation Prepare detailed capacity building plan Submit proposal to A&M Team Receive 2nd tranche Capacity Building Fund Develop detailed sub projects proposal (in the agreed format) Prepare procurement plan Identify technical assistance needs Short l i s t serviced providers Open Sub-project accounts Prepare CC collection plan Prepare O&M plan Prepare community level M&E plan Obtain Maha Sabha approval Collect community cash contribution Submit proposal to A&M Team Sign agreement between BOD and the Foundation and M O U between BOD and SPC Identification and formation o f SHGs
0 Capacity building o f SHGs VSCOformed Opportunity identification Solution days
* Credit & IGA plan prepared and approved Subprojects:
m Prepare Implementation plan m Request 1st tranche m Procure services m Procure materials m m
m 8
Collect Community Contribution Stage 1 Train para professionals/community members in 0 & M Construction activities - stage 1 Conduct supervision o f stage 1 10% community contribution for 2nd stage collected Utilization certificate Drovided to GF
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Completion Phase
Second tranche released Construction o f works - Stage 2 Conduct second stage supervision O&M funds collected (Two month wor th o f user charges) Uti l izat ion certificate provided to GF Release thud tranche Commission works Finalize implementation completion report Complete social audit Micro Credit & IGA: Savings and loaning activities by small groups Performance audit 1 o f SHGs by BOD Grant to SHGs by BOD Savings and loaning activities by small groups (Contd.) Sk i l l building activities for identif ied I G A s Solution days o n identif ied themes Implementation o f IGA activities by beneficiaries Performance Audit- 2 of IGA schemes Ski l l building activities for identif ied IGAs Solution days o n identif ied themes Savings and loaning activities by small groups (Contd.)
Sub-projects:
Capacity building activities
Capacity building activities Sustainability action p lan (final)
Participatory sustainability evaluation exercise - 1
Sustainability action p lan - 1 Operation and maintenance by communities Participatory sustainability evaluation exercise - 2
Income-Generation Activities: Implementation o f IGA activities by beneficiaries Performance Audit - 3 o f IGA schemes Ski l l building activities for identif ied I G A s Solution days o n identif ied themes
Develop and O&M plan: Perform supervision Check milestones Request Second Tranche Develop O&M plan Prepare Technical review
Prepare Financial Review: Prepare Process Review Prepare Audit Report
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Monitoring and Learning Aspects (including Social Accountability) 29. The monitoring, learning and evaluation system (ML&E) o f the project will monitor and generate information about project progress and performance and disseminate this information amongst stakeholders to enable them to promptly address implementation issues. Through a leaming process the project will revise and refine implementation processes and procedures in order to improve i t s performance and effectiveness. The system will monitor inputs, outputs and outcomes o f various project institutions, project processes and project impact. Three major aspects that need to be monitored are the quality o f group formation processes, the quality and performance o f service providers, and the efficiency and effectiveness o f appraisal process (timeliness, speed o f response, rejection rates, etc.) A Monitoring Information System (MIS) will be developed in-house to support the overall ML&E system. The M I S will be simple, participatory and responsive to the operational needs o f management to allow decisions about project implementation and corrective actions to betaken in a timely manner.
Quarterly
Monthly
Quarterly Six monthly
30. The Management Team wil l be responsible for overall monitoring’ o f the process and implementation progress. One of the main reasons for centralizing a l l the information o n sub project proposals at the national level i s t o facilitate not only the monitoring o f the project but also the init ial evaluation o f i t s performance and impact, and to ensure timely release o f project funds.
committee responsible for tracking and monitoring o f VAP outcomes, SAC
Sub-divisional facilitators, District level coordinators
A&M Teams
CEO
3 1. ML&E System Structure: The ML&E system will operate at four levels. The structure will enable information f l ow both horizontally and vertically. In order to increase effectiveness o f the ML&E system and reduce data redundancy, each level will be responsible for maintaining data at that level. Reports will be generated and sent both horizontally and vertically and be made available across the system.
Level
Primary
Secondary
Tertiary
Quaternary
Purposes
Monitoring o f village processes and activities, and tracking major indicators for gender, equity, commitment, sustainability, disseminating guidelines, internalizing ‘Golden Rules’, addressing technical problems and fund flow issues, taking overall responsibility for community develoDment Aggregation o f community level and divisional information and tracking o f physical and financial progress o f sub-projects under implementation Monitor desk and field review standards, establish and track service standards, operational procedures and performance measures and produce progress reports referring mainly to technical aspects o f project Traclung and monitoring o f Key Performance Indicators for the entire program
Frequency I Data Source I /Responsibility
Monthly 1 Village level M&E
In formation received by: BOD o f VOs, Maha Sabha, village level project sub committees, sub- divisional coordinators
DrFTs, A&M Teams
District level D C C D S chief District coordinating committee
WB, GOSL, the Foundation
55
Institutional Arrangements for ML&E
32. Village Level: Decision-making and tracking community level development will be the main focus of ML&E activities at this level. A village level information and monitoring subcommittee will be set up to collect and analyze information on VDP progress. This sub committee will report progress to the BOD and the Maha Sabha. The members o f the subcommittee will be provided focused training in both conceptual and operational aspects o f ML&E. The progress reporting o f VDP development will be the ultimate responsibility o f the BOD.
33. Vil lage level decision-making will be supported by regular surveys and data collection o n family profiles, compliance with the ‘Golden Rules’, information that reflect changes in livelihood. Data will be captured and reported o n a monthly basis. Given adequate and stable power supplies and a computer, this staff member wil l serve as a nodal point o n the M I S systems.
34. Division and District levels: District and divisional level officials will be responsible for ML&E aspects in each GND. The project has already appointed several sub divisional facilitators whose primary responsibility will be to report to the divisional level.
35. The project has been staffed with a district level coordinator who wil l collect, analyze and aggregate data at the district level and be the point o f contact for each division. These district level coordinators will report o n a monthly and quarterly basis on formats provided to them by national level ML&E consultants. The project will provide computers at this level for data storage and analysis.
36. Provincial level: The A&M Team will conduct appraisals two to three times a week in a two- step process. This two-step process will include a quick desk review and a more extensive field review. Reporting frequency at this level will be at monthly and quarterly intervals.
37. National level: The ML&E officer will be responsible for the ML&E systems and for the development o f a national M I S system, which will include an electronic network that will extend up to and include the district levels. At lower levels manual procedures will be in place for data gathering and reporting. When the village information centers are in place the Management Team with national consultants will develop plans to include activities for monitoring and reporting village level data using electronic fi le transfers to the national level.
38. Once the project cycle has been developed and each area specialist has identified specific roles, a master l i s t o f indicators wil l be prepared for the project as a whole. This master indicators l i s t will probably include 3 to 4 indicators for each area o f specialty.
39. National level consultants are currently developing an MIS. Where computers are available modules o f the database will be installed at the village (lowest) level. The database will be designed in a modular fashion in order to facilitate the installation o f sub modules at appropriate levels.
Social Accountability
40. The objective o f social accountability mechanisms i s to develop a culture o f accountability within the VO and the communities, between service providers and communities and between the Foundation and the communities. Some o f the mechanisms that will be used in the project include:
0 Baseline community report cards indicating the criteria which VO members would l ike to use to evaluate VO’s performance and six-monthly fo l low up report cards exercises to assess scoring o f
56
the VO’s performance. This also helps to develop a rating system for VOs. T h e data i s then discussed in open meetings o f the Maha Sabha and the BOD to identify corrective actions;
0 VOs’ self-evaluation about i t s own performance and presentation to the village on a periodic basis;
0 Display of a l l key financial and physical information at a prominent location or at the VO’s office;
0 Report cards on performance of various service providers by VOs and sharing o f this data with providers to develop better service standards. T h i s information would be made public to a l l VOs;
0 Training o f SAC members o n input and expenditure trachng, financial supervision and report cards to enable them to report in VOs o n a periodic basis;
0 Development of a user report card on the Foundation’s performance o n an annual basis by interacting with a sample o f community members and changing organizational processes as a result of the feedback (market research and client perception);
0 Piloting a PS report card o n service delivery performance o f PS in selected divisions where intensive work i s undertaken o n local governance development.
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Annex 7: Financial Management and Disbursement Arrangements
S R I LANAK: Community Development and Livelihood Improvement “Gemi Diriya” Project
Country Issues 1. A Country Financial Accountability Assessment (CFAA) has just been completed for Sri Lanka. GOSL has been an active participant in the C F A A process and i s in the process o f carrying forward the recommendations. The C F A A has identified several areas o f reforms required in the public financial management arrangements at the country and local government levels, the institutional arrangements proposed for Phases 1 and 2 o f the project are sufficiently sanitized for the country level issues to have any significant effect o n the smooth implementation o f the project. At the country level, availability o f counterpart funds f rom GOSL has been an issue. However, over the last few years, GOSL has accorded high priority to donor funded projects and this i s not considered to be applicable to the proposed project.
2. The project would devolve the powers, responsibilities and funds to PAS by using a gradual approach, in three phases. The process envisaged would entail substantial investment in building the capacity o f local governments and creating enabling environment for them to respond to the community demands. As part o f the capacity building plan, a detailed action p lan for bringing about improvements in the financial management capacity will be developed and be one o f the triggers to move into Phase 3.
Strengths and Weaknesses 3. Strengths: The project has the following strengths in the area o f financial management:
(i) Financial management manuals for the GMF and VOs have been prepared. The manuals will govern a l l financial management aspects o f the project and would be revised and improved periodically based o n implementation experience. The manuals have a l l the elements o f good financial management systems. The framework o f financial management has been significantly simplified and special care taken to reduce the accounting centers to the minimum. This would become a critical factor as the project scales up. Since the design o f the project i s largely community-based, disbursement procedures applicable to community-driven development projects, as explained in Fiduciary Management for Community-Driven Development Project: A Reference Guide (May 2002), have been applied. Lump sum contractual arrangements for the sub projects significantly reduces the need for accounting for the sub projects in the project books o f accounts as releases made o n the basis o f milestones are regarded as project expenditures.
(ii)
(iii)
Significant weaknesses
SigniJcant weaknesses The capacity o f VOs for custody and handling o f cash, book-keeping and financial management i s very limited.
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Resolution The fol lowing steps built into the project design will ensure that an adequate financial management system i s in place: 0 Proper, simple financial management
and accounting manuals are in place; 0 The project has developed a multi
pronged training strategy (training o f Executive Committee in financial management, development o f a cadre o f para professionals etc. to build the required s h l l s in the community groups to manage and account for the
project funds); Institutional arrangements at the village level (Finance & Procurement sub committees, sub project committees and internal audit and social audit committees) will provide the framework needed to ensure that there i s transparency in the operations. Functions o f the Finance Committee will include requirements o f periodic and surprise cash counts and cash reconciliation.
Financial Management Framework
4. National Level: The Foundation will be responsible for the financial management arrangements for the project. I t will maintain accounts for a l l project expenditures on double entry systems fol lowing generally accepted national accounting standards and will be subject t o GOSL financial regulations. The financial management systems wil l allow expenditures to be classified by project components/activities and disbursement categories and prepare monthly/quarterly /annual reports required for project management. The accounting and reporting system will be manual in the beginning and will move into a computerized environment during the l i fe o f the project. The Foundation will be responsible for compiling withdrawal claims for the project and liaise with GOSL as wel l as with IDA for fund releases and operation o f Grant. The Foundation will provide overall policy level support in developing financial management policies and disseminating lessons learned.
5. The Foundation will consider setting up higher level Finance and Audit Committees at the level o f the BODS with nominated professionals in the f ie ld o f audit, financial management, rural banking etc. as considered appropriate. The Finance Committee and Audit Committees will p lay a more active role in deciding o n financial management policies, review financial progress and have overall oversight functions, receive and review audit reports (internal and external) and monitor fo l low up actions and make recommendations for revision o f accounting and financial management policies.
6. The A&M Unit with two field offices in each o f the provinces will essentially act as a ‘clearing house’, responsible for institutional and technical appraisal o f the sub-projects, and ensuring compliance with the rules o f the game (for participation, inclusion, transparency, cost sharing and cost effectiveness and technical requirements) and good quality o f service provision to communities. Robustness o f the appraisal mechanism, particularly in developing cost estimates for the sub projects will be the key challenge. These Units will account for the operational f ie ld expenditures and submit monthly reports o f the expenditures to the Foundation.
7. District and Divisional/ PS Facilitation Teams (DrFTs and DFTs): At the district and divisional levels, the project will provide an advance equal to 45/60 days o f estimated expenditures, to meet i t s operational expenditures against an agreed budget The DrFTs and D a will be required to submit monthly financial statements o n a timely basis, accompanied by copies o f supporting documents, t o become eligible for additional advances.
8. Vil lage Organization: VO consists o f the Maha Sabha, BOD, and various committees. VO will plan, implement and supervise sub-projects, manage funds, procure goods, services and works, operate and maintain community assets, and conduct self-monitoring for cost effectiveness and sustainability. The fiduciary relationship will be dnven by lump sum financing agreements between the Foundation and
59
the VO, and VOs will consequently not be considered as accounting centers under the project. However, the financial management framework envisages active monitoring o f the financial management functions and this has been built into the design o f the system.
9. The Executive Committee, duly elected by the General Body o f the Association will be responsible for a l l the executive functions and be accountable to the Maha Sabha for the implementation o f the project activities. The Executive Committee will appoint sub-project committees, Finance and Procurement sub-committees to be responsible for specific functions. The Executive Board o f the VO will devolve funds and functions to other sub- committees, as considered necessary for implementation, but essentially remain accountable for a l l the operations.
Executive Committee:
10. Sub-project Committee: Sub-project committees (Procurement, Finance, Internal Audit, Social Audit, Income Generating Activities, and others) plan, and prepare detailed proposals, execute, monitor implementation and arrange for post-Project operation and maintenance to ensure sustainability o f the assets created under the project.
1 1. Finance Committee: The Finance Committee appointed by the Executive Committee will be responsible for the overall financial management aspects and wil l fo l low the financial management guidelines documented in the Operational Manual. The Committee will be specifically responsible for oversight o f a l l the accounting and reporting functions. T h i s would include periodic surprise cash checks, verifying reconciliation o f books o f accounts with bank statements and ensuring that the requirements as set in the Operational Manual are being complied with at the VO and sub project committee levels.
12. Procurement Committee: The Procurement Committee will be responsible for a l l procurement functions and will ensure that the procurement guidelines for purchase o f goods and services are strictly followed, assist the sub project committee to negotiate for highest quality for approval o f a l l procurement proposals forwarded by the committees, as per the agreed procurement thresholds.
13. Social Audit Committee (SAC): The SAC will be nominated by the Maha Sabha directly to “watch” the work o f Executive Committee and al l other committees to check whether they are “just and fair”, and fol low the rules and principles. The Committee will meet at least once a month and report their observations and provide recommendations to Maha Sabha at least once in three months.
14. Village - Savings and Credit Committee (VSCC): The VSCC will manage the Loan Fund that has been granted f rom the project t o the VO. I t will ensure that the Loan Fund keeps i ts value by setting market interest rates and strictly monitoring loan repayment. I t will also ensure that savings activities managed by SGs and Clusters are properly managed.
Funds Flow
15. and/or labor contributions. The envisaged fund f l ow for the Project i s as follows:
The project will be fimded f rom three sources: GOSL, IDA and the beneficiaries through cash
16. National Level: The Foundation will be responsible for preparation o f the annual budgets and submission o f the same through the Ministry o f Samurdhi t o the Director General, Budget and Director General, Planning. These estimates will be included in the Government’s annual expenditure budget to obtain appropriations f rom the Parliament. GOSL contributions will be transferred to the project by the Treasury o n an imprest basis and supported by actual expenditure statements. T o facilitate timely f l ow o f funds to the Foundation, IDA will advance a portion o f the proceeds o f the Grant t o a Special deposit Account to be maintained at the Central Bank o f Sri Lanka f rom which the Foundation will draw funds against eligible project expenditures. A replenishment application will be prepared and submitted to the
60
Bank monthly for the amounts withdrawn from the Special Account while disbursements are transaction- based and quarterly when disbursements are FMR-based.
17. The Foundation will also be responsible for transferring project funds in agreed installments, directly to the V O s in accordance with the financing agreements that would be entered into between the Foundation and the Vil lage Organizations. The C O M gives details o f eligibil i ty criteria, size and nature o f community subprojects, appraisal process and certification o f milestones, terms and conditions o f financing agreements and fund f low arrangements.
18. The A&M Units will be provided with imprest advances (equivalent to two months fund requirements) f rom the Foundation. The Units will submit monthly expenditures statements to the Foundation and obtain replenishment o f the imprest on a monthly basis.
19. District and DivisionaUPS Facilitation Teams: At the district and divisional levels, the project will provide imprest advances (equivalent to two months fund requirements) f rom the Foundation. The Units will submit monthly expenditures statements to the Foundation and obtain replenishment o f the imprest o n a monthly basis.
20. Villaae Organizations: VOs will open two bank accounts - one for the project funds and the other for their o w n membership collections and other sources o f funds. The project bank account will receive funds directly from the Foundation Office against financing agreements, and also to credit capital contribution by the community. This account will be operated o n behalf o f VO by the Executive Committee members under the jo in t signature o f at least two officer bearers o f Executive Committee.
2 1. Sub-Proiect Agreements & Beneficiaw Contributions: The Foundation will enter into financing agreements with the VOs for implementation o f the sub-projects. The financing agreements will include the sections:
0 Overall Financing Agreement o n selection o f the VO for implementation o f the sub-project. Under the overall Financing Agreement, the VO will be provided with in i t ia l capacity building fund to carry out the preparatory work and initiate capacity building activities. Addenda I to the Overall Financing Agreements wil l cover terms and conditions for the capacity building component. The funds for the activities will be released in agreed tranches and will require reporting o n utilization o f the funds released earlier and refundadjustment o f unspent funds. Addenda I1 to the Overall Financing Agreement will cover terms and conditions for the implementation of the specific sub-projects. Each sub-project will have a separate agreement and release o f the funds will be based o n achievement o f pre-determined and mutually agreed physical and process milestones and in installments agreed between A&M Team and the VO. Savings on account o f economy and efficiency will be retained by the VO for activities agreed by Maha Sabha. Cost overruns on account o f faulty design or extraneous reasons will be reviewed by the A&M Team, sanctioned by the Foundation under the circumstances and in accordance with the norms and procedures agreed between GOSL and IDA and released to VO through supplementary financing agreements. Addenda I11 to the Overall Financing Agreement will cover specific terms and conditions for the implementation o f the L S Fund. This will fund the micro finance activities o f the VO aimed at building a sustainable and viable VSCO primarily meant to expand opportunities for income generation for poor women and youth. The releases against this fund will be made in installments l inked to demonstrated institutional, financial and performance indicators.
0
0
0
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22. All payments against Financing Agreement as released by the Foundation to the VO will be treated as eligible expenditure for claiming reimbursement because these payments are based on achievement o f performance and financial indicators in the sub-projects. The date o f release o f such installments to the VOs will be a point o f eligibility for claiming reimbursement by GOSL from IDA.
23. The mechanisms o f accounting for beneficiary contributions in lund are detailed in the Financial Management Manual and the COM. The amounts and method (cashAund/labor) o f contributions will be agreed and documented in the financing agreements and in the case o f cash contributions (largely upfront) there would be conditions for release o f funds. In kindlabor contributions are built into the milestone certification provided by the communities and will be accounted for by the Foundation on the basis o f these certificates.
Funds Flow Arrangements
G E M I D I R I Y A F O U N D A T I O N B a n k a c c o u n t
I I I I I 1) o E II n? e n I S
I l l I' B c ilil a I i e g! A p p r a i s i n g A g e n c i e s
F a c i l i t a t io n . T e a m ( 1111 p i e r i
S u p e r v i s i o n T e a m t l n i
1 ~ m p i e n i e n ( i n g i g e n c i e \
1 V A / P S - B a n k a c c o u n t 1
P r a d e s h i y a S a b h a / A p p r a i s
Staffing & Training:
24. National Level: Since the Foundation will be the main accounting and reporting hub for the project, the National Project Management Team wil l have a senior level Finance Manager, deputed from the Treasury o f GOSL, responsible for development o f overall project level policies on financial management, accounting, auditing and beneficiary contributions etc. The Team will also include a professional chartered accountant as the Accountant - Project to be operationally responsible for the consolidation o f the project financial reports, submission o f withdrawal claims etc. The Accountant - Project will also steer the computerization initiative later, building in adequate integration with the overall MIS for the project. The Finance function will be supported by adequate number o f accountants. These positions are expected to be mainstreamed into the Foundation core staff. In addition, the national level staffing would include a position o f an Accountant - Sub Projects (with previous experience in accounting at community level and preferably from NGO/development background) and will lead the development o f policies and strategy and i t s implementation to build adequate book keeping capacity at the village level.
25. The provincial A&M Units will each have an Accounts Assistant, who will be responsible for maintaining the accounting records required for the Unit's expenditures and tracking o f al l sub-proj ect agreements, releases made, financial reports submitted and accounting o f beneficiary Contributions etc.
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26. District and Divisional Facilitation Teams: One o f the Community Facilitators (CF) at the Facilitation Team level will be designated as CF-Accounts and will be responsible for ensuring the qualitative aspects o f book keeping and financial management at the village level. The CF-Accounts will have relevant experience in accounting and be responsible for implementing the capacity building strategy and provide hand holding support to the book keepers.
27. The staffing requirements o f Accountant - Project and Accountant - Sub Projects (at National level), Project Assistants - Accounts (at Provincial level) and Community Facilitator - Accounts (at Divisional Facilitation Team level) are project specific and will need to gradually shift to Pradeshiya Sabhas and Vil lage Organizations as the project progresses into Phase 2 and 3.
28. Villaae - Level: At the village level, the finance, accounts and social audit functions will be with different institutions/committees as described earlier in the section o n institutional arrangements. The VO will hire the services o f an accountant or entrust the responsibility to a member o f VO duly trained under the project for book keeping and maintaining accounts. If necessary s l l l s are not available at the village level, a suitable person can be identified and trained as a para-professional. As an alternate option, a cadre o f self-employed accountants will be developed and encouraged to set up accounting practices at the village level, whose services can be availed by the VOs.
Training:
29. Since the project financial and accounting staff at the national and Provincial levels will be newly recruited, and will not have been involved in the design o f the project and the design o f the financial management system, they need to be trained in the requirements o f accounting and reporting under the project. These trainings wil l be arranged in-house in consultation with the Finance Manager and will draw o n internal and external expertise for the purpose. The accounting staff will also need to be trained to operate the computerized financial management system, once i t i s ready.
30. Capacity building o f the institutiondcommittees at the village level to manage the funds, maintain books o f accounts, report periodically o n the financial progress to a l l the stakeholders will be one o f the most critical aspects o f the project. The accountant with the DFTs wil l play a key role in this function. A centrally driven standardized approach to training, development o f standard training materials, training o f trainers and provision o f standard books o f accounts will improve the degree o f compliance o n the ground. The modular standard set o f training capsules will address the requirements o f training o f office bearers o f the VO, Sub Project Committees, Social Audit Committee etc.
31. The Project will promote, as a conscious strategy o f internalizing capacities at the village level, identification and development o f potential para-professionals in book keeping and accounting. Para- professionals will be identified during the init ial batches and their s l l l s will be developed by involv ing them in Project processes and capacity building activities. Para-professionals may take up various roles as facilitators, motivators, trainers, resources persons or service providers to villages during the subsequent batches.
Accounting Policies and Procedures
32. The Financial Management Manual has been prepared and documents in detail the accounting and financial management processes and procedures. In addition, the Foundation will develop its own financial rules, which will be based o n GOSL rules.
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33. Books o f accounts for the project would be maintained using double-entry book-keeping principles, principally on cash basis. A detailed record o f a l l project liabilities will, however be maintained. Standard books o f accounts (cash and bank books, journals, ledgers, etc.) would be maintained at a l l levels. The books o f accounts will be maintained on a manual basis until the integrated computerized accounting system i s developed.
34. A Chart o f Accounts has been developed to enable data to be captured and classified by expenditure centers, budget heads, procurement methods, project components/activities, and disbursement categories. This matches closely with the classification o f expenditures and sources o f funds indicated in the project documents (PIP and Project Cost Tables). The key issues that have been addressed in the design of the accounting policies and procedures are:
0
0
0
0
0
0
35.
Accounting entries for recording the beneficiary contributions in kind will be made on the basis of certification o f achievement o f the specific milestones as la id down in the Sub-project agreements (specifiing the Contributions in kmd linked to each milestone). The COM will include guidance o n the accounting for beneficiary contributions in cash and labor and will cover aspects of: (i) conversion o f in hnd/labor contributions to monetary amounts; (ii) accuracy o f computations; (iii) approval by the Treasurer; (iv) review and authorization by the VO; and (v) proper posting and recording in the prime books o f account Releases of installments against the sub-proj ect agreements will be recorded as expenditures in the books of accounts o f the project. All other releases o f funds to accounting centers (Provincial Teams etc.) will be accounted for as advances in the books o f accounts o f and adjusted to expenditures only o n submission o f expenditures. Various levels o f controls have been developed in the financial management framework. Special authorities, approvals, delegation o f authority, approval l imi ts at various levels, milestone certification, payment responsibility and controls to safeguard project assets have been developed and documented in the Financial Management manual; Service standards to process financial transactions and reporting formats have been developed in order to fulfill the fiduciary obligations. Jobs are segregated, reporting functions and key responsibilities are clearly la id down; At al l accounting centers, separate books o f accounts will be maintained for the project funds as per the requirements specified in the Financial Management Manual.
VO will maintain simple accounts recorddregisters as follows: (i) Cashbank Book; (ii) contributions received in cash/labor/materials; (iii) materials purchased and utilized. In addition, the VO will retain al l vouchers, bills, supporting documents and ensure that bank pass books are regularly updated. Similar accounts wil l be maintained for the O&M bank account and reports submitted to i t s members at M S meetings. Standards pre-formatted books and registers will be provided to each VO. The institutional arrangements at the village level have been structured to provide for custody and handling o f cash. T h i s will include periodic and surprise cash counts and reconciliation.
Audit Arrangements
36. External Audit:: The Foundation, as a body corporate, will, in consultation with the Auditor General o f Sri Lanka (AG), appoint an independent firm o f chartered accountants to conduct annual audit of the project. The audit would cover a l l project operations o f the national level, provincial levels and will also cover the VO accounts o n sample basis. The selection and appointment o f the private CA firm by the AG Office will be based o n Terms o f References (TORS) acceptable to IDA, and the selected firm will need to be acceptable to IDA. The audit report would consist of: (i) financial statements and i) and audit
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opinion confirming whether the project financial statements have been prepared in accordance with consistently applied Accounting Standards and give a true and fair v iew o f the operations o f the project during the year and that the withdrawals f rom the IDA Credit made o n the basis o f SOEs or FMRs together with the procedures and internal controls involved in their preparation, can be relied on to support the related withdrawals. Additionally, the auditor will be required to provide a management letter t o project management highlighting findings during the audit. The audit will be conducted as per the internationally accepted standards and financial reporting will fo l low the IPSAS.
Implementing Agency Gemi Di r iya Foundation
37. The audit report with the management letter will be submitted to IDA within six months o f the close o f each financial year. TORs for the audit has been prepared in agreement with IDA and wil l be agreed upon with the audit f i d s . The form o f annual financial statements to be certified will also be agreed with the AG. Thus the following audit reports wil l be monitored in the Audit Reports Compliance System (ARCS):
Audit Auditors Date Due SOEProject C A firm 30 June o f each
I Audit'SA year
38. VOs as institutions constituted under the Companies Act, will be legally obliged to have their accounts audited annually by a CA firm. A s a demonstration o f good practice, each o f the VOs implementing the project will be required to submit audited statements o f expenditures and audit reports for the project within 6 months o f the close o f the financial year. The VOs will also have the option o f engaging f i r m s o f chartered accountants f rom the panel prepared by the Provincial Appraisal & Monitoring Units. These will maintain a panel o f chartered accountancy f irms, based on the general l i s t approved by the Auditor General and agree o n the rates o f fees to be charged. TORs have been developed for the audit at the VO level and are documented in the Financial Management Manual. Fo l low up o f the audit observations by the VO Executive Committee, will be monitored by the District Financial Management Teams and such reports will be made available to the IDA supervision teams, as required.
39. Internal Audit: The project accounts will also be subjected to quarterly internal audit. A firm o f chartered accountants will be engaged by the Foundation to conduct a quarterly and annual audit and submit management letters to the Management. The TORs o f the internal audit task have been drafted and included in the Financial Management Manual. The key internal audit function would be to (i) ascertain whether the systems o f internal checks and controls operating are effective; (ii) ascertain reliabil i ty o f accounting financial reports; (iii) ascertain the extent to which the systems in place prevent misuse o f project assets; and (iv) ascertain that the financial rules and procedures as la id down in the Manuals are followed. Arrangements to ensure proper liaison and coordination with the external auditors and the AGs office will be built into the Manual.
40. GOSL shall employ not later than September 30, 2004, and thereafter maintain throughout the Project implementation period a firm o f chartered accountants with terms o f reference and qualifications acceptable to IDA, for conducting the internal audit o f the records, accounts and financial statements of the Project.
41. Reporting and Monitoring: The monthly reporting formats f rom each o f the accounting centers have been designed to provide summarized monthly financial information o n the fund flows, balances in cashhank, status o f advances and expenditures classified by project components/activities, disbursement categories, procurement methods etc. These reports wil l be compiled by the Foundation o n monthly and quarterly basis to provide meaningful FMRs. An important aspect o f the reports would be that the information on the number o f village-wise sub-projects signed, value o f the sub-projects, releases made against the agreed milestones, contributions accounted for, status o f financial reports submitted by the
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VOs will be monitored. These reports will be prepared from the start o f the project, submitted to IDA within 45 days o f the close o f the quarter and used by the project at the state and district level and by IDA for monitoring and management decision making.
42. The financial arrangements between the VO and the Foundation will not require financial accounting for the sub project expenditures in the project books. All payments against the contracts will be recorded as expenditures in project books. However, VOs will be required to submit regular statements o f expenditures summarizing sources and uses o f funds against the plans in order to build accountability and demonstrate the presence o f adequate accounting and book-keeping arrangements.
43. VOs will prepare a simple report summarizing: (i) the sources and uses o f funds, indicating the balances in cashhank; (ii) contributions in labor and materials; and (iii) physical progress o f works/activities. The report will be presented to i t s members and in the M S and provide al l records for scrutiny by members. The submission o f the monthly financial report will be required as a pre-condition for release o f subsequent installments against the individual sub-project agreements. The financial management arrangements set up would emphasize o n providing local level transparency, social audit and self-accountability. These measures would include a simple summary o f the accounts (amounts received from the members and the project, amount spent and balances in hand) to be publicly posted in the notice board in the village. In addition, the books/registers, vouchers and bank pass books would be open for perusal by members.
44. The social audit functions (comprising o f internal reviews/audits o n al l aspects o f quality, quantity, procurement, beneficiary selection etc. conducted by an independent committee appointed by the Maha Sabha - the assembly o f a l l the members o f the VO) at the VO (where a substantial part o f the expenditures will take place) are being adequately strengthened under the project and will play an important role in ensuring transparency and accountability at the community level. The SAC will countersign the milestone certificates that are required to trigger the release o f the tranches. The M S will approve final statements o f expenditures for each o f the components. Additionally, the project will engage external consultants to conduct a concurrent review o f the qualitative and quantitative aspects o f the works, including financial aspects.
Computerized Financial Management Svstem
45. The computerization o f the financial management system has not been envisaged f rom the start o f the project but will be initiated before the end o f Year 2 o f the project. The key issues considered whi le developing the design o f the software were:
0 Integration with the M I S system - qualitative information o n the sub-project proposals/contracts tracked in the M I S system are l inked by common code numbers in the F M S system. Financial information relating to the sub-project contracts are tracked by the same code numbers. The system would be not be project specific but wil l broad base to cover the entity level operations. The system will allow accounting o f multiple projects and overall consolidation at the entity level. The system would be used for generating financial reports required to be submitted to the GOSL and the Accountant General as wel l as required for project management.
0
0
Imr>act of Procurement Arrangements
46. The nature and type o f the contractual arrangements with the VOs lay the basis o f accounting for the project. A s has been envisaged, the Foundation will enter into contractual arrangements with the VOs for implementation o f the village development plans. These agreements will be based o n lump sum
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contracts with payments based o n performance milestones agreed and documented in the contracts. The achievement o f the performance milestones will be certified. Thus, the project will report o n achievement o f performance-based milestones to obtain reimbursement f rom IDA.
Disbursement Arrangements
47. Disbursements f rom the Grant Account would init ially be made o n the transaction-based system (reimbursement with full documentation and against statements o f expenditure, direct payment and Special Commitment. GOSL may request withdrawals f rom the Grant Account to be made o n the basis o f reports to be submitted to the Association in form and substance satisfactory to IDA, such reports to include the Financial Management Reports and any other information as the Association shall specify by notice to GOSL (Report-based Disbursements).
48. Periodic advances (or tranche) payments to VOs can be treated as eligible expenditures for replenishment as long as they are made in line with the provisions o f the financinghb-project agreement (linked to achievement o f agreed milestones). Supporting documentation for the replenishment would be in the form o f a simple summary statement providing details about the payments to the sub-projects, e.g., sub-project total amounts approved, amounts paid to date o n account o f the sub-project, and the amount o f the current payments, as wel l as certification o f achievement o f milestones by the Appraisal and Monitoring Teams.
49. A Special Account would be opened at the Central Bank o f Sri Lanka and would be operated by the Foundation. The authorized allocation o f the Special Account would be US$3.8 million, that represents about four months o f average estimated eligible expenditure for financing f rom the IDA Grant. The Special Account would be operated in accordance with IDA’S operational policies.
50. The Foundation will compile the financial information f rom a l l i t s management constituent agencies and prepare reimbursement claims on a monthly basis when disbursements are made on transaction-basis quarterly when made o n FMR-basis. The Foundation wil l also be responsible for submission o f the withdrawal applications to GOSL for onward submission to IDA for replenishment o f the special account, reimbursement, or direct payment.
51. IDA may require withdrawals fi-om the Grant Account to be made o n the basis o f statements o f expenditure for: (i) works costing less than US$500,000 equivalent each; (ii) goods costing less than US$250,000 equivalent each; (iii) goods or works obtained through contracts costing less than US$lOO,OO equivalent each financed under a sub-project; (iv) employment o f consulting firms under contracts costing less than US$lOO,OOO equivalent each; (v) employment o f individual consultants under contracts costing less than US$50,000 equivalent each; (vi) contracts with consulting f i r m s or individual consultants costing less than US$50,000 equivalent each financed under a sub-project; and (g) a l l training, studies, and operating costs, a l l under such terms and conditions as IDA shall specify by notice to the Recipient.
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Action Plan
52. The key actions required to ensure adequate financial management arrangements are in place are
Action
as follows:
Responsibility
Employ a firm o f character accountants with TORS and qualifications acceptable to IDA, for conducting the internal audit o f the records, accounts and financial statements o f the Project. Implementation o f a computerized financial management system Develop Financial and Administrative rules setting our procedures for malung payments, delegation o f authority, advances, travel and other allowances, salary structures and allowances, promotion policies, performance review, conveyance rules, etc. Develop Accounting and Loan tracking system and financial management training modules for community facilitators
GOSL
GOSL
GOSL
Foundation
Completion Date
September 30,2004
March 3 1,2005
September 30,2004
September 30,2004
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Annex 8: Procurement Arrangements Community Development and Livelihood Improvement “Gemi Diriya” Project
A. Procurement Responsibilities And Capacity
1. The procurement arrangements under the project are primarily based o n IDA’S appraisal o f the existing procurement management capability o f the Foundation that has been set-up under the project. Experience and lessons learned from the other Bank-financed projects in Sri Lanka have been incorporated into the design of the implementation and procurement arrangements. A draft procurement p lan has been prepared. In addition, GOSL has submitted a capacity building plan with actions and recommendations to build procurement capacity o f the Foundation and other implementing agencies. The Foundation does no t have any experience with the Wor ld Bank procurement procedures.
2. Because o f the nature o f this project, bulk o f the procurement will be undertaken by the VOs or cluster o f VOs. There i s a need therefore to strengthen the capacity of VOs as wel l as the divisional and national level implementing entities - the Foundation, DrFTs, DFTs, PSs, and SOs. A full-time procurement officer has been hired, and would be trained in the Bank procurement procedures and guidelines as wel l in the community procurement aspects. In addition, an Individual Procurement consultant would be appointed to provide on-the-job training to divisional and district level staff as wel l as to the communities to develop in house capacity. The Consultant would also conduct a series o f workshops to develop the procurement capacity at the Foundation, District, Divisional, provincial teams, PS and SO levels. Several officers both at central and provincial level will participate in at procurement training programs conducted at the regional level.
Action Plan for Strengthening The Foundation’s Capacity to Implement Project Procurement
3. Based on an appraisal of the capacity of the Foundation to manage and conduct procurement, and guide the communities on the procurement aspects, the following actions have been identified and recommended for improving the procurement capacity in the field: (i) the Foundation to hire an additional person as an individual consultant to build the in-house capacity; (ii) ensure procurement training for the Procurement Specialist as wel l as for other the Foundation staff; and (iii) train the village communities and divisional facilitators in the Community Procurement procedures, rules and processes as agreed and documented in the COM.
B. Procurement Methods
4. All procurement of c iv i l works and good contracts under the project will be carried out in accordance with the World Bank Guidelines: Procurement under IBRD Loans and IDA Credits, dated January 1995, revised in January and August 1996, September 1997 and January 1999 (henceforth referred to as Procurement Guidelines). Consultant Services financed by the project shall be procured in accordance with the Wor ld Bank Guidelines o n the Selection and Employment o f Consultants by Wor ld Bank Borrowers, dated January 1997, revised in September 1997, January 1999, M a y 2002 (henceforth referred to Consultant Guidelines). IDA Standard bidding documents including evaluation reports for Procurement under International Competitive Bidding (ICB), and Sri Lanka-specific Bank model documents for Procurement under National Competitive Bidding (NCB) which are already being used in Sri Lanka and Community contract formats pre-approved for the Project (Manual o f Procedures) shall be used for procurement of goods and works under the project. The Bank’s standard Request for Proposal (RFP) or a modified version with the pr ior agreement o f the Bank will be used in the selection of Consulting Firms, SOs and Individual Consultants. The methods to be used for procurement are described
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below and the estimated amount for each method, are summarized in Table A. The threshold contract values for the use of each method are established in Table B.
5. GOSL has prepared guidelines o n "Government Tender Procedure'' in 1996 (revised in August 1997) under Chapter 13 o f the Financial regulations. For the f i rs t time the Guidelines and Rules provide a framework for a l l public procurement in the country, including PC, PS and LA. The Guidelines include a separate chapter (XIII) for projects supported by foreign funding agencies (this chapter has been revised in December 2000 and issued as a separate booklet) to ensure transparency in procurement activities which i s being revised in line with the CPAR recommendations.
Notification Of Business Opportunities
6. A General Procurement Notice (GPN) will be published in UN "Development Business", and the issue o f Development Gateway in January 2004. Specific procurement notices for a l l ICB contracts and Expression o f Interest (EOI) for contracts for consultancy services above US$200,000 will be advertised in the Development Business, eg. market o f Development Gateway and in a major national newspaper (in the national and English languages). Contracts procured under National Competitive Bidding (NCB) procedures will be advertised in a national paper o f wider circulation in the local language.
C. Procurement Arrangements
Community Procurement
7. Most o f the procurement (works, goods and services) in the project will be done at the commun i t yN0 level. Under the project, the eligible communities wil l undertake sub-project activities through their own efforts based o n a demand-driven approach. The procurement procedures, process and methods have been developed extensively during the implementation o f the V S H L I pilot. These procedures and guidelines have been further reviewed during the proposed project preparation, and are being tested in the 24 intensive learning GNDs The COM (in local language) based o n the above experience gives detailed procedures, rules and methods o f community procurement.
8. Procurement at the villageicommunity level will be guided by Community Participation in Procurement (CPP - Para. 3.15 o f the Procurement Guidelines). The VOs will directly enter into contracts with private contractors, SOs, consultants, government agencies, and will be guided by the principles o f efficiency, equal opportunity, cost-effectiveness and transparency o f the process. The VOs/communities will manage and implement community infrastructure sub-projects such as water supply, sanitation, minor irrigation, link roads, community centers, hire slulled contractors and purchase materials locally to ensure minimal delays and reduce inefficiencies due to loss during transport and storage. Standard price l is ts (based o n market rates) will be developed, maintained and updated regularly under the guidance o f the districddivisional team, and will be used by the VOs/communities as standard rates to guide their procurement. Specific procurement arrangements under are summarized are as follows:
9. Villagekommunity Sub-project Grants oJS$47.5 million): The Vil lage Development component will finance sub-projects which are demand-driven in nature, making it diff icult to determine ex-ante what i s to be procured. Grant funds f rom the project can be used for services, goods, training, and works. The VOs/communities may obtain technical, management support and advice f rom the l ine agencies at the division and district level or decide to hire local consultants, SOs for these services. The community and social infrastructure sub-projects would include: new and rehabilitation o f existing village link roads to improve the network o f inter-village roads, small scale water supply and environmental friendly sanitation schemes works involv ing l o w technical complexity, dug wells, rehabilitation of village
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level reservoirs and minor irrigation rehabilitation, community centers etc. The productive sub-projects will include income generation activities, such as sk i l ls building, village information luosks, micro- businesses, livestock activities, and hiring o f technical services for sk i l ls building training for employment opportunities. The village sub-projects would also include hiring o f SOs to help the VOs and sub-project committees prepare and implement the village development plan. The average value o f each sub-project would be about US$20,000 and maximum would not exceed US$SO,OOO. If the community elects not to carry out works itself, then these works may be procured through local shopping i.e. o n the basis o f comparison o f price quotations obtained f rom at least three pre-qualified contractors that are eligible as per the Guidelines, or f rom registered and experienced SOs.
10. The f i rs t sub-project contract per district, regardless o f value, and a l l contracts with an estimated value o f US$lOO,OOO or above shall be subject to IDA’S pr ior review. The A&M team will review the f i rs t contract for goods and works under sub-projects in each division, regardless o f value, and a l l contracts with an estimated value o f US$50,000 or above. The agreed procedures for community procurement are as follows:
0 Works: Most works undertaken in the project will use community participation to mobilize and pay labor. A small number o f works may need to be procured through small works. The fol lowing methods will be used: (i) execute the works themselves by employing labor and by procuring the needed materials and technical assistance; or (ii) award the whole or part o f work on direct contract to community organizations or registered SOs; or (iii) award the whole or part o f work to qualified domestic contractors after inviting three quotations (value o f each contract less than US$SO,OOO) in response to a written invitation; or (iv) award the whole or part o f work to qualified contractors after inviting Competitive Bids (value o f each contract more than US$50,000).
0 Goods: The goods estimated to cost less than US$500 per contract may be procured through direct contracting procedures, and the direct contracting should be in accordance with the procedures as specified in the COM. Goods estimated to cost less than US$30,000 per contract would be procured through shopping procedures o n the basis o f at least three quotations.
0 Services: The services estimated to cost less than equivalent o f US$l ,OOO may be hired following section V o f Bank’s Guidelines for the Selection o f Consultants by inviting proposals f rom three or more service providers or technical consultants or under single source method. Consulting services estimated to cost less than US$ 10,000 may also be hired based on consultant qualifications. Any service contracts costing more than US$lO,OOO but less than US$SO,OOO should be invited through newspaper advertisement.
Works and Goods
1 1. Small Works (estimated to cost upto US$1.0 million): Small works estimated to cost less than US$50,000 per contract will be procured under lump sum, f ixed price contracts awarded on the basis of quotations obtained from three qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description o f the works, and the award should be made to the lowest bidder. All works estimated to cost more than US$50,000 but less than US$500,000 would be procured through NCB.
12. Goods (estimated to cost upto US$2.4 million): The project supports the procurement o f office equipment (including computers, printers, and telephones), furniture, audio-visual equipment, networkmg and website development, media equipment, printing o f campaign material, training materials, books and periodicals, vehicles, etc. Goods would be procured fol lowing Bank procurement Guidelines (January
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1995, revised January and August 1996, September 1997 and January 1999). The following procurement methods would be followed:
0 International Competitive Bidding (ICB): Packages o f goods estimated to cost more than US$200,000 per contract would be procured following ICB procedures. Since the works and goods are small, ICB i s not considered as an appropriate method.
0 National Competitive Bidding (NCB): Packages o f Goods and equipment estimated to cost less than US$200,000 and more than US$50,000 per contract would be procured on the basis o f N C B procedures in accordance with the provisions o f paragraphs 3.3 and 3.4 o f the Guidelines. All N C B contracts to be financed from the proceeds o f the Credit shall follow the following procedure as described in (Attachment 1 o f Annex 8).
0 National Shoppine INS): Packages o f Goods, and equipment estimated to cost less than U$50,000 per contract up to an aggregate amount not to exceed the equivalent o f US$600,000 would be procured under contracts awarded on the basis o f National Shopping procedures in accordance with the provisions o f paragraphs 3.5 and 3.6 o f the Guidelines.
0 Direct Contracting (US$O.l million): Proprietary equipment and spares, books, periodicals, software, training materials (Video/Audio, etc.) and small equipment estimated to cost less than US$l,OOO per contract upto an aggregate not to exceed the equivalent o f US$lOO,OOO would be procured following Direct Contracting procedures in accordance with para. 3.7 o f the Guidelines.
Technical Assistance and Consultancy Services (US$4.7 Million)
13. Project will fund Technical Assistance and consulting services for management support for formation, development and strengthening o f VOs and federation, preparation and implementation assistance (including engineering design) for community and social infrastructure activities and services such as water supply schemes, irrigation, roads etc., advice and implementation support for Income Generating activities, special studies, development o f monitoring and leaming system, etc. The consultant selection procedures are as follows:
0 Quality and cost based selection (QCBS) and Quality Based Selection (QBS): These methods wil l be used for contracting consultant services that are estimated to cost more than US$lOO,OOO per contract. Consultant Qualification (CQ): T h i s procedure will be used for contracting services valued at less than US$lOO,OOO per contract. Least Cost Selection (LCS): This procedure will be used for the services o f annual audit o f the project financial statements and accounts which would also include a procurement audit component. Individual Consultants (IC): Individual consultants will be hired in accordance with Section V o f the Guidelines on the basis o f individual qualifications after comparison o f not less than three suitable CVs. Procedures for the contracting o f individual consultants will be used for specialized assignments that may either be o f long-term or short-term duration. Short-term assignments which need quick action and flexibility such as, literature survey, data collection on a specific need, compilation o f specific information leading to larger interventions, report writing, computer mapping; documentation, editing, translating, drafting o f terms o f reference on larger assignments will be hired under this method. Fixed Budget (FB): This method will be used for the services o f SOs to mobilize the village communities, facilitate prioritization o f their developmental needs and formation o f the VOs.
0
0
0
0
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0 Single source (SS): T h i s method will be used for contracting o f the following services: (i) services that are very specialized in nature, such as community to community technical assistance, capacity and confidence building, and hand-holding; services o f para-professionals and federations o f Village Organizations; other community specific experience and how ledge which i s not easy available in the remote areas, and there are only few agencieshndividuals o f with such sk i l ls and experience; (ii) preparation for printing o f various documents f rom the local language to English and from English to local language; and (iii) writing o f news briefs and organizing press releases and interactions with other stakeholder, and other innovative ways o f communicating messages to various stakeholders. Service Delivery contracts: This method will be used for contracting o f the following services: (i) services o f local level facilitators and sub divisional facilitators; (ii) support and junior level staff to provide necessary support to the project managers during implementation and monitoring; and (iii) private sector services for technology development. The TOR, j o b descriptions and specific outputs for such assignments have been agreed, and will be reviewed by IDA o n an annual basis.
0
Hiring of Institute of Construction, Training and Development (ICTAD)
14. IDA has agreed to hire the services o f ICTAD that has unique experience in the country for training the communities and local level officials and service providers in internationally tested labor based construction techniques. This will be implemented in two phases depending o n the need and estimated cost around US$200,000.
Training and Workshops (uS$5.0 million)
15. Training will focus o n building capacity o f staff at the Foundation, District, Divisional levels including the staff at PCs, PS and SOs where relevant. Courses will be conducted at local, provincial, national and international level in social mobilization, community participation, social capital, CBOs, micro-finance, sub-proj ect development, environment management and monitoring and evaluation, procurement and financial management. There will be a number o f in-house training programs. Workshops/Seminars would also be conducted where topics o f importance would be discussed in an open forum with respected experts. Several selected staff f rom the Ministry, participating Districts, Divisions, PCs and PSs will take part in training programs and exposure v is i ts to best practices outside Sri Lanka in procurement. There will also be training programs for SOs and other service providers in capacity building for social mobilization, project design, and maintenance o f social and community infrastructure services.
Incremental Operating Costs (uS$4.2 million)
16. The incremental costs would be financed o n a declining basis and would cover vehicle maintenance (fuel and insurance), supervisory f ie ld visits (travel and per diem), office supplies and operating cost, communication expenses, and salaries o f contract staff.
D. Assessment of Borrowers Readiness to Implement the Project
17. Due to the demand-driven nature o f the project, i t i s not possible to prepare a detailed Procurement Plan and Schedule for the community driven activities. However, a procurement plan has been prepared for the goods and equipment and consultancy services to be procured in the project outlining proposed methods of procurement, which has been reviewed and agreed and would be updated annually. A tentative training p lan has also been prepared identifying the areas o f training, number and type o f participants to be trained, and the names o f the Institutions and resource organizatiodpersons.
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18. Disbursement Profile: For the f irst year, disbursement i s expected to be low, at about 5% because the init ial year could consist largely of . capacity building o f key implementing agencies and orientation to promote familiarity with work plans, sub-project cycle, procedures as la id out in the community operational manual, development o f training materials, and testing o f the pi lot batch o f 24 GNDs. Disbursement will p i ck up at year 2 at about 15%, increasing to 35% in years 3 and 4; and tapering o f f to 10% in year 5.
Review by IDA of Procurement Decisions
19. Procurement Planning and Information: Procurement o f c i v i l works, goods and services for the project will be carried out in accordance with the agreed Procurement Plan, which will be updated as necessary and included in the progress reports for IDA review and approval. The annual implementation plans will include a procurement plan as well. There wil l be quarterly reports o n procurement, as part o f the Project Management Reports, which will update changes in timetables and in addition reflect information f rom sub-projects that have been added. Procurement information wil l be collected and recorded as follows: (i) prompt reporting o f contract award information by individual sub-project implementing agencies, to the project coordination unit, for their respective components; and (ii) comprehensive quarterly reporting on: (a) revised cost estimates for individual contracts and total cost; and (b) revised timings o f procurement actions including advertising, bidding, contract award and completion time for individual contracts. IDA will review the procurement arrangements by the Foundation, including contract packaging, applicable procedures, and the scheduling o f the procurement processes, for its conformity with IDA procurement and Consultant Guidelines, proposed implementation program and disbursement schedule.
20. Prior Review by IDA:
Prior Review Thresholds: The following procurement actioddocumentation will be subject to
Works and Goods: Prior review i s required for the f i rst NCB contracts for goods and works and a l l other contracts for works o f value more than US$500,000 and for Goods o f value more than US$250,000 - as per the provisions set forth in paragraphs 2 and 3 o f Appendix 1 of the Bank Guidelines.
0 Consultant Services and Training: All consultancy contracts with f i r m s o f value more than US$lOO,OOO and with individuals o f value more than US$50,000 would be subject t o pr ior review as per provisions set forth in paragraphs 2 and 3 o f Appendix 1 o f the Bank Consultancy Guidelines. For expenditures related to the provision o f training, TOR, including budget will be reviewed.
21. Despite the l o w limits stipulated for pr ior review o f contracts, not more than 5% o f the contracts are expected to come under the provisions of pr ior review. This appears reasonable considering the nature of the project and the procurement involved therein.
22. Post review: The contracts below the prior review threshold for Works, Goods and Consultancy services shall be subject to post review as per procedures set forth in paragraph 4 o f Appendix 1 o f the Bank Guidelines and Bank Consultancy Guidelines. Given the small size o f the average contracts, post review i s not expected to capture more than 1 in 20 contracts.
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Proposed Procurement Arrangements
23. The project elements, their estimated costs, and proposed methods o f procurement has been summarized in Table A.
Table A: Project Costs by Procurement Arrangements'
'Figures in parentheses are the amounts to be financed by IDA. All costs include contingencies.
Includes c i v i l works and goods to be procured through national shopping, consulting services, services o f contracted staff o f the project management office, training, technical assistance services, village grants, and incremental operating costs.
2
Table B: Thresholds for Procurement Methods and Prior Review'
Expenditure Category
1. Works
2. Goods
Contract Value Threshold
(i) civi l works estimated to cost the equivalent o f US$50,000 or less value
(ii) works estimated to cost the equivalent o f more than US$50,000
(i) goods estimated to cost the equivalent o f US$50,000 or less value per contract
Procurement Method
(i) By inviting quotations f rom at least three qualified contractors
National Competitive Bidding
National Shopping
Contracts Subject to Prior Review
Post Review
First contract and al l contracts estimated to cost above US$500,000 Post review
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II Services Zonsulting services by VGO services, technical issistance and training 3y finns
Zonsulting services by ndividuals
Zonsulting services for : o m u n i t y specific :xperience and short- e m assignments 1. Village sub-grants
(ii) goods to cost US$lOOO o r less per contract
(iii) goods estimated to cost the equivalent o f more than US$50,000 upto US$200,000 per contract
(iv) goods estimated to cost the equivalent o f more than US$200,000
(i) Contracts estimated to cost less than US$ 50,000 equivalent
(ii) contracts equivalent t o US$50,000 and above but less than US$lOO,OO
(ii) contracts above us$loo,ooo
(i) contracts less than US$50,000
(ii) contracts more than US$SO,OOO
(i) contracts less than US$25,000 for firms (ii) contracts less than US$5,000 for individuals
Less than US$50,000
Direct Contracting
National Competitive Bidding
ICB
CQ, f ixed budget, QBS, sole source o r any other method as per guidelines
CQ, f ixed budget, QBS, QCBS, sole source o r any other method as per guidelines
QCBS or QBS
Section V o f Guidelines
Section V o f Guidelines
CQ, FBS, sole source
Section V o f Guidelines
Quotation, direct contracting, community participation as specified in the Community Operational Manual
0
0
Total value o f contracts subject to prior review: About 5% o f total Overall Procurement Risk Assessment: High
Post Review
First contract
Prior Review o f a l l contracts above US$250,000 equivalent Post review TORs and the short-lists o f crit ical nature
Post Review
Prior Review
Post review TORs o f generic and crit ical nature only
Prior Review
Post Review A br ie f TOR specifying output, cost and time schedule and CV
Post Award Review First sub-project contract in each district
24. Frequency o f procurement supervision missions proposed: One every 6 months. The supervision will also include special procurement supervision for post-review/audits. Foundation, on behalf of GOSL, shall hire an extemal consultant to carry out ex-post reviews and asset verification for not less than 10% (by value and number) o f the contracts. IDA will conduct a sample ex-post audit o f contracts
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including consultant's outputs. IDA will also review procurement, as necessary, either by site visi ts or by desk reviews o f documentation.
Table C: Allocation of Grant Proceeds
Expenditure Category Amount in US$ mil l ion SDR$ mil l ion Financing Percentage Goods, works, 34.0 22.8 95% consultants' services, and training financed through village sub-grants Works 0.6 0.4 80%
Goods 1.4 0.9 100% foreign expenditure, 100% o f local expenditures (ex-factory cost) and 75% o f local expenditures for other items procured locally
Training and Workshop 5.0 3.3 100%
Consultant Services (including audit)
100% o f foreign expenditures and 80% o f local expenditures for
75% o f local expenditures for consultant services by individuals
70% from January 1,2007 until December 3 1,2008; and 60% thereafter
3.5 2.3 consultant services by finns and
Incremental Operating 2.5 1.7 80% unti l December 3 1,2006; costs
Unallocated 4.0 2.8
Total Grant Proceeds 51.0 34.2
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Annex 8 Attachment 1
All NCB contracts to be financed f rom the proceeds o f the Credit shall fo l low the following procedure as described below:
only the model bidding documents for NCB agreed with IDA (and as amended from to time) or the Procurement Support Bureau (PSB) shall be used for bidding; invitations to bid shall be advertised in at least one widely circulated national daily newspaper, at least thirty days pr ior t o the deadline for the submission o f the bids; bid documents shall be made available by mai l or in person, to a l l who are willing to pay the required fees; qualification criteria (in case pre-qualification was not carried out) shall be stated in the bidding documents, and, i f a registration process i s required a foreign firm declared as the lowest evaluated responsive bidder shall be given a reasonable opportunity o f registering, without let or hindrance; n o special preference will be accorded to any bidder when competing with foreign bidders, state-owned enterprises, or small-scale enterprises; bid shall be opened in public in one location, immediately after the deadline for submission o f bids; bids shall not be rejected merely o n the basis o f a comparison with an of f ic ia l estimate without pr ior concurrence o f IDA; contracts shall be awarded to the lowest evaluated responsive bidders; except with the pr ior concurrence o f IDA, there shall be n o negotiation o f price with the bidders, even with the lowest evaluated bidder; re-bidding shall not be camed out without pr ior concurrence o f IDA; except in cases o f force majeure andor situations beyond the control o f the project states, extension o f bid validity shall not be allowed without the prior concurrence o f IDA (i) for the first request o f extension if it i s longer than eight weeks; and (ii) for a l l subsequent requests for extension irrespective o f the period; a l l bidderskontractors shall provide bidperformance security as indicated in the bidding documents; evaluation o f bids shall be made in strict adherence to the criteria disclosed in the bidding documents, in a format and specified period agreed by IDA; a bidder's bid performance security shall apply only to the specific bid, and a contractors security shall apply only to the specific contract under which it was furnished; bids shall not be invited on the basis o f percentage premium or discount over the estimated cost; and there shall not be any restrictions o n the means o f delivery o f the bids.
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Annex 9: Economic and Financial Analysis
S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
1. A precise ex ante estimation o f the cost-effectiveness, economic rate o f return and fiscal impact o f the project i s no t possible because o f i t s demand-driven nature, which does not allow to determine a priori how available resources will be allocated by the beneficiaries. Moreover, a l l project components a im at empowerment and strengthening o f community and divisional level institutions and at facilitating economic and non-economic opportunities for the rural poor. An economic cost-benefit analysis might not be able to evaluate the project, as most benefits deriving f rom it are non quantifiable in terms o f economic or financial returns.
2. However, experience from similar community driven projects in the South Asia region indicates that projects o f this type, involving community contributions, are highly cost efficient. First, the demand- driven nature o f each sub-project permits scarce resources to f l ow where they are most needed. Second, communities have a vested interest in achieving the best quality-price ratio, maximizing cost-savings and ensuring accountability. Third, the delegation o f subproject implementation directly to communities has proven to generate cost savings when compared to comparable quality works implemented by public agencies. The contracting procedures prescribed in the COM require direct contracting through competitive processes on al l sub projects. This contributes to the cost-effectiveness o f the sub projects financed under the project.
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Annex 10: Safeguard Policy Issues and Gender and Youth Strategy
S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
Social Safeguards:
1. Indigenous People are no t triggered, for the following reasons:
The Social Assessment has confirmed that OP 4.13 o n Involuntary resettlement and OD 4.20 o n
2. Involuntarv resettlement (OP 4.13): Land requirements under the project fa l l into the fo l lowing two broad categories: (i) land for community facilities; and (ii) land for private enterprises. In both cases, land requirements are expected to be nominal. The V S H L I pi lot experience shows that community infrastructure schemes largely consist o f upgradehehabilitation o f existing ones whi le large multi-village schemes are not envisaged by the project. Land requirements for private facilities (commercial and household facilities) will not be acquired by the project. Lands for such purposes would be made available by individual and group beneficiaries through their own private lands or through acquisition at market rates.
3. Given this background, OP 4.13 i s not triggered. I t was agreed with project authorities that: (i) the project will not resort to involuntary land acquisition; (ii) as far as possible public lands would be used for community facilities; (iii) in cases where public lands are not available, land (without encroachments, disputes and encumbrances) will be secured through voluntary donations or through out right purchase from a willing seller; in either case, land would be transferred in the name o f the community organization through legal transfer; (iv) records o f a l l land donations would be maintained for independent verification of voluntary nature o f such transactions; and (v) grievance redress mechanisms would be available for a l l land sellers.
4. Indigenous people (OD 4.20): The social assessment identifies the Veddhas as the only ethnic group that could be potentially categorized under the characteristics defined in OD 4.20. However, the majority o f Vedda have been relocated and rehabilitated under the Mahaweli resettlement scheme and have become Sinhalese: they speak Sinhala language and have been culturally mainstreamed. F rom an economic point o f view, however, the social assessment shows h o w the new mode o f subsistence based o n settled cultivation, with individual plots o f land, a reliance o n paddy and the use o f ago-chemicals does not seem to have a had a huge impact among the Veddhas, who used to depend on hunting and gathering activities. Nonetheless, they do not exhibit the characteristics defined in OD 4.20 as there i s n o difference between such Veddhas and local population. As a result, there i s n o need to prepare a separate indigenous peoples development plan.
Summarv Findings of Social Assessment:
Community Typologies and Key Characteristics
5. The social assessment identified four main types o f rural communities in the project area: (i) traditional villages; (ii) newly created settlements (under colonization, village expansion and udagam3, Mahaweli schemes); (iii) fishing communities; and (iv) villages under special circumstances (villages with indigenous population, war-affected communities and tourism-affected comm~n i t i es )~ . K e y features of each community type are summarized in the table below.
Those created under Mill ion Houses Program. Field visits were made to 30 villages, covering all the four categories.
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Table 1: Key Features of Communities
Social, cultural
Livelihoods
Traditional
Caste plays a significant role in social and economic relations. Families belonging to l ow caste are marginalized. Vil lage temple plays an important role: chief monk takes advisory role to CBOs; temple i s used for gatherings.
Agriculture (paddy, chena, mixed crops) is the mainstay.
Newly Created Settlements
Old colonies: settlements created after independence by migrants f rom Wet Zone. Village expansion and udapam: encroachers and landless people who were given unproductive upland. Mahaweli: new settlements in the major irrigation scheme.
Agriculture (irrigated paddy and upland crops) is the mainstay. Off-fann employments. Poor infrastructure.
Fisheries
Most members are kinship-related.
75% o f labor force engaged in fishery. Majority do not own a boat, but rent and pay ha l f the catch to the owners. Women are engaged in coir industry.
Special Circumstances
Indigenous: a small population o f Vedda in original habitations. They speak Sinhala and integrated in the Sinhalese culture. Original culture seems to be only maintained for tourism. Others settled in Mahaweli and were assimilated into mainstream, but suffer adaptation problems and high morbidity. Tourism-affected: located on coastal belt. War-affected: fear o f attack is sti l l existing, normally o f village l i fe has not retumed, alcoholism prevails. Indigenous (Mahaweli): paddy, home gardening, hunting and fishing. Tourism-affected: engaged in fisheries and tourism industry, well-developed infrastructure. Income fluctuations.
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Gender Women’s contributions to household income are estimated at 35% in studied villages.
Average women’s labor contribution to agriculture is 36%, domestic labor 79%.
Credit, indebted-ness
Women’s contributions to household income are estimated at 57% in studied villages.
Institutions
Mudalali (village shop owner) is the main source o f credit.
Women are not wi l l ing to take loans because o f the risk. Settu common among women.
e Seasonal pattems o f indebtedness o f the poor
Informal social organizations are relatively strong.
participation in CBOs is high.
Women’s
Similar to traditional villages in the Dry Zone
Weaksocial
More CBOs than
Poor access to
networks.
traditional villages.
banks, markets, etc.
Isolatedorinaccessible hamlets or households
Fisheries
They are to some degree marginalized groups. There are villages or even GN divisions located far away from the motorable roads. Development practitioners pay very little attention to
Women’s contributions to income from fisheries are estimated at 10%. For coir industry, women’s contribution is 90%.
Major i t yo f fishermen borrow from Sanasa Samithiya.
role.
indebtedness o f the poor
Mudalai s t i l l plays a
Seasonal pattems o f
A number o f CBOs, many credit societies. Women’s participation in CBOs is high.
Special Circumstances
Indigenous (Mahaweli): many female children stop schooling after puberty, women get married young.
women’s contribution to income k o m tourism is slightly lower than men’s. Prostitution and drug use among youth, women suffer f rom unwanted pregnancies, abortion, family problems, etc. A high rate o f poor FHHs.
Tourism-affected:
Vulnerable and Marginalized Groups
6. nature o f their vulnerability.
The Table below l ists vulnerable and marginalized groups identified by Social Assessment and
Table 3: Vulnerable and Marginalized Groups
Category Newly created communities
Low/minor caste Ethnic minorities
Descriptions Poverty i s one common factor found in al l the communities under the study. However, chena villages, model villages and colony expansions lack many things unlike in the traditional rural and the planed colonization communities. Caste problem i s found in the traditional villages, especially in the up country villages. Even in the fishing communities some minority caste (not necessarily low caste) are isolated. In some villages especially traditional villages located near the estate belt, there are few Tamil families. There are also some villages where a Muslim minority lives.
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Category
Women
Female-headed households
Uneducated persons
Disabled persons
Descriptions such villagers or GNDs. In some GNDs some sections or groups o f households in the division are located far away f rom the road so that they cannot access to benefits f rom development interventions. Women in general are marginalized compared to men. This group should be carehl ly treated. In some cases women have come forward more than men in the activities o f CBOs. But their voice i s not h l ly heard and their participation in decision-malung i s relatively low. Female-headed households in many cases receive the public sympathy. Many organizations are sensitized about the problems experienced by female-heads. They could be therefore considered as being in the periphery not in the centre. They get something mainly because o f the sympathy. Their voice i s not in the decision-malung process and most o f the time they are occupied because o f they have to play a duel role. As they are mostly burdened with household work their participation in decision-malung could be limited. However, some female-heads are active members or office bearers in CBOs. Uneducated persons are marginalized even f rom CBOs due to obvious factors. Some cannot read and write so that they cannot take responsibilities o f decision-making at CBOs. They are silent listeners in the development interventions. Unless participatory techniques are applied their voices are not heard and choices are not included in project plans. Both children and more so the disabled are severely marginized and are not included in the decision making process. Special mechanisms/ procedures need to be put in place to ensure their inclusion and participation in the development process.
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Women and Youth Strategies and Action Plans
7. Gender Strategy and Action Plan: Rural women in Sri Lanka contribute a significant share to household income and labor, and have primary responsibility over the productive activities o f the household. However, their social standing in the public sphere remains low. Notwithstanding the increasing number o f women actively participating and managing community organizations, most o f these serve practical and immediate needs o f rural women rather than building long-lasting capacity at the community level t o address gender equity. Meanwhile, gender i s one important factor that impacts household vulnerability. Female-headed households, in particular widows or estranged wives with small children, are not only economically impoverished, but also socially marginalized.
8. In recognizing that women’s empowerment and their participation in development opportunities will benefit not only women but also the entire community o f the current and next generations, the project aims to mainstream gender in al l the project-related activities. Gender equity i s a cross-cutting aspect o f the project, and measures to establish and sustain gender equity have been set in the whole project design and implementation arrangements. In addition, the project sets gender empowerment and participation as a trigger for the next phase. The overall gender goals o f the project are threefold: (i) social balancing (power balancing) through awareness and sensitization; (ii) economic empowerment o f women through their l ivelihood improvements; and (iii) promotion o f village level initiatives towards social issues.
9. In view o f the above, Gender Strategy and Act ion Plan o f the project consists o f three components, addressing three objectives: (i) gender mainstreaming and awareness building; (ii) ensuring women’s equitable participation and benefit sharing; and (iii) provision o f special assistance to the most vulnerable women. The fol lowing sections introduce the main activities, whi le more detailed information about the implementation arrangements and the Act ion Plan i s provided in the PIP.
a. Gender Mainstreaming and Awareness Building: This component aims at mainstreaming gender in project designs and implementation modalities, at the same time creating genuine and long- lasting understanding o n gender issues among the project stakeholders at a l l levels. This wil l b e achieved through (i) gender sensitization training for a l l project managers and selected community leaders; (ii) inclusion o f a full-time gender and youth specialist in the national team; and (iii) gender-sensitive project ML&E.
b. Ensuring; Women’s Equitable Participation and Benefit Sharing: This component aims at achieving women’s equitable participation in and benefit sharing f rom the project. This will be done by internalizing gender aspects in the whole process o f community-level situation analysis, planning, implementation and monitoring, thus enabling the communities to regard gender as a positive factor for better economic and social relationships. Experience f rom V S H L I and the p i lo t phase indicates that up-front and unambiguous messages stressing the principles o f gender equity and need for their inclusion for the benefit o f the entire community create an enabling environment for women’s participation.
c. Providing; Special Assistance to the Mos t Vulnerable Women: Some women in the village are too poor and vulnerable to start up livelihood improvement activities. Requiring such women to fulfill (for example, widows and estranged wives with small children) the same conditions o f contributions would run a risk of malung them indebted and more vulnerable. The project will provide a one-time grant to such households, which can be uti l ized to finance income generating activities o f their choice. I t i s essential that identification o f such poorest and most vulnerable households i s done in a transparent way that ensures the communities’ consensus and support for the neediest.
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10. Youth Empowerment Strategy and Action Plan: While the rural youth in Sri Lanka have relatively high levels of education and aspirations, they have limited j o b opportunities, social and polit ical powerlessness in the village societies, and cultural norms that discourage their active participation in public activities and decision-malung. Experience from V S H L I and the pi lot phase suggests that youth can play a leadership role wherever there exists an enabling environment and where proper avenues to realize their aspirations and interests are provided. The Youth empowerment strategy o f the project focuses o n the following sections. The detailed information about the implementation arrangements and the Act ion Plan i s provided in the PIP.
0 Awareness Building o n Youth Issues and Opportunities: This component aims at increasing awareness o n the constraints and opportunities o f the village youth, as wel l as importance o f their participation in the project. I t i s critical that both youth and adult members o f the communities discuss these issues openly and come to shared understandings, rather than the youth working separately f rom the mainstream decision making.
0 Encouraging Youth Participation: The project makes it a norm that a l l village organizations’ committees include at least three youth members. This, however, has to be done o n the basis o f the communities’ understanding and appreciation that would be fostered by awareness building at the community level. Village Facilitators and supporting SOs will play the key role in this at the time o f establishment o f village organizations.
0 Promotion o f Youth Income Generation Opportunities: The project will finance the promotion o f (i) partnerships with the private sector to develop innovative enterprises and (ii) demand-driven vocational training facilities to link up j o b opportunities for educated village youth.
0 Improving Coping Skills o f the Youth: To improve the coping s l l l s o f the youth with distress, the Focal Point o n Social Issues will ensure youth’s access to professional services by making a l i s t of agencies and qualified individuals for counseling and facilitating a coordination mechanism with them with support f rom gender and youth coordinator o f DFT.
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Annex 11: Project Preparation and Supervision
S R I L A ” : Community Development and Livelihood Improvement “Gemi Diriya” Project
Planned Actual PCN review February 28,2003 February 25,2003 Init ial PID to PIC March 14,2003 March 11,2003 Init ial ISDS to PIC Appraisal December 3 1,2003 December 18,2003 Negotiations February 23,2004 February 18,2004 BoardRVP approval March 30,2004 Planned date o f effectiveness August 15,2004 Planned date o f mid-term review September 30 2006
March 5,2003
Planned closing date March 3 1,2009
Key institutions responsible for preparation o f the project:
Ministry o f Rural Economy, GOSL; Ministry of Agriculture and Livestock and Samurdhi, GOSL and Gemi Diriya Foundation.
Bank staff and consultants who worked on the project included:
Name Title Unit Anne Ritchie Micro-Finance Aspects PSDCG Barbara Verardo Social Aspects SASRD Deborah Lee Ricks Program Assistant SASRD
Luis 0. Coirolo CDD & Policy Framework LCSER Malcolm Jansen Environmental Aspects SASES Manvinder Mamak Financial Management SARFM Meena Munshi Task Leader SASRD Parmesh Shah Participatory/CDD aspects SASRD R.R. Mohan Social and Safeguards SASES Samantha D e Silva Direct Financing HDNSP Sumith Pilapitya Environmental aspects SASES Surendra Joshi Rural infrastructure aspects SASEI Tashi Tenzing EngineenndTechnical SASEI Terrence Abeysekera Co-Task Leader SASRD Vikram Raghavan Legal Aspects LEGMS Suzanne Moms Senior Finance Officer LOAG2 Wahida Huq Institutional Aspects SASRD Ghazali Raheem M&E Specialist FA0 Yoshiko Ishihara Social/Gender Aspects FA0
Deepal Fernando Procurement Specialist S A R P S
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Annex 12: Documents in the Project File
S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
Project Implementation Plan, January 2004
Project Community Operational Manuals, January 2004
Socio-Economic Benchmark Study, January 2004
Technical Assessment o f Roads Component, January 2004
Expenditure Review, January 2004
Desk Review Of S r i Lanka Village Information Centers, January 2004
Environmental Assessment, December 2003
HumadElephant Conflict Assessment, January 2004
Poverty Mapping O f Uva And Southern Province
Social Assessment And Operational Gender Strategy, January 2004
Financial Management Manual, January 2004
NGO Assessment, January 2004
Monitoring and Learning System (MLS), January 2004
Institutional Assessment, November 2003
87
Annex 13: Statement of Loans and Credits
SRT L A ” : Community Development and Livelihood Improvement “Gemi Diriya” Project
Original Amount in USS Millions
Difference between expected and actual disbursements
Project FY Purpose ID
IBRD IDA SF GEF Cancel. Undisb. B i g . Frm. Rev’d
~~
PO50741 2003
PO58067 2003 PO74730 2003 PO77586 2003 PO76702 2002
PO77761 2002
PO69784 2001 PO71131 2001 PO50738 2001 PO44809 2000
PO58070 2000
PO10525 1998 PO34212 1998 PO35828 1998 PO10513 1997 PO10517 1996 PO42266 1996
Relevance and Quality of Undergrad. Educ Second Community Water National HIVIAIDS Prevention LK Economic Reform TA Renewable Energy for Rural Economic Dev. Renewable Energy for Rural Economic Dev. Distance Learning Initiative - LIL LK Central Bank Strengthening LAND TIT. & RELSERV (LIL) LEGAL AND JUDICIAL REFORMS North-East Irrigated Agriculture Project GENERAL EDUCATION I1 MAHAWELI RESTRUCTURI CONS OF MEDIC PLANTS ENVIRONMENTAL ACTION PVT SECT INFRAS DEV TEACHER EDUCATION & TEACHER DEPLOYMENT
Total:
0.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00 0.00
40.30
39.8 12.6 15 .OO 75.00
0.00
2.00 30.30 5.00
18.20
27.00
70.30 57.00 0.00
14.80 77.00 64.10
0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 8.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00 4.57 0.00 0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00
0.00
0.86 0.00 0.00 0.00
15.01 0.00
41.79
40.85 12.96 12.79 64.84
6.79
0.92 10.13 3.67
13.14
10.93
24.45 4.26 0.25 1.37
19.75 7.09
4.97
1.05 2.58
-0.95 -4.25
-0.30
-0.85 6.95 1.18
-6.03
4.86
25.33 4.50 0.23 1.96
39.5 1 11.48
0.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00 0.00
0.00
3.37 0.00 0.00 0.00
22.36 17.27
0.00 548.40 0.00 12.57 15.87 276.03 92.30 43.00
SRI LANKA STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars
Committed Disbursed
IFC IFC
FY Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Approval
0196 Asia Power 6.56 2.27 0.00 4.92 6.56 2.27 0.00 4.92 2003 CBC 0.00 9.96 0.00 0.00 0.00 9.96 0.00 0.00 1999 Fitch Srilanka 0.00 0.09 0.00 0.00 0.00 0.09 0.00 0.00 1997 LOFAC 0.42 0.00 0.00 0.00 0.42 0.00 0.00 0.00 1981182189 Lanka Hotels 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 NDB Housing Corp 0.00 1.06 0.00 0.00 0.00 1.06 0.00 0.00
0199 Nations Trust 0.00 1.09 0.00 0.00 0.00 1.09 0.00 0.00 1997 Packages Lanka 0.00 1.11 0.00 0.00 0.00 1.11 0.00 0.00 1999 SAGT 33.50 7.30 0.00 0.00 23.50 3.62 0.00 0.00
2000 Suntel 0.00 7.50 0.00 0.00 0.00 7.50 0.00 0.00 1988195 Union Assurance 0.00 0.50 0.00 0.00 0.00 0.50 0.00 0.00
Total portfolio: 40.48 30.88 0.00 4.92 30.48 27.20 0.00 4.92
Approvals Pending Commitment
FY Company Approval
~~~ ~~
Loan Equity Quasi Partic.
~~
2003 CBCeylon 2003 Dialog 2001 SAGT SWAP
0.01 0.00 0.00 0.00 0.04 0.00 0.01 0.00 0.00 0.00 0.00 0.00
Total pending commitment: 0.05 0.00 0.01 0.00
Statement o f IFC's
Held and Disbursed Portfolio
As o f 10131/2003
(In US Dollars Millions)
Held Disbursed
FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic
0196 Asia Power 6.56 2.27 0 4.92 6.56 2.27 0 4.92 2003 CBC 0 9.96 0 0 0 9.96 0 0 1999Fitch Srilanka 0 0.09 0 0 0 0.09 0 0
1981182189 Lanka Hotels 0 0.64 0 0 0 0.64 0 0 2000NDB Housing Corp 0 1.06 0 0 0 1.06 0 0
0199 Nations Trust 0 1.09 0 0 0 1.09 0 0 1997 Packages Lanka 0 1.11 0 0 0 1.11 0 0 1999 SAGT 21.69 3.62 0 0 21.69 3.62 0 0 2000 Suntel 0 7.5 0 0 0 7.5 0 0
1988195 Union Assurance 0 0.99 0 0 0 0.99 0 0
Total Portfolio: 28.25 28.33 0 4.92 28.25 28.33 0 4.92
Approvals Pending Commitment
Loan Equity Quasi Partic 2003 CBCeylon 14 0 0 0 2003 Dialog 40 0 I O 0 2001 SAGT SWAP 1.5 0 0 0
Total Pending Commitment: 55.5 0 10 0
89
Annex 14: Country at a Glance
S R I LANKA: Community Development and Livelihood Improvement “Gemi Diriya” Project
20.1 20.1 26.8 26.3 15.9 15.9 53.1 53.6
74.0 76.6
POVERTY and SOCIAL
2002 Population, mid-year (millions) GNI per capita (Atlas method, US$) GN I (Atlas method, US$ billions)
Average annual growth, 199602
Population (%) Labor force (%)
Most recent estimate (latest year available, 199642) Povetty (% of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutriition (% of children under 5) Access to an improved water source I% of population) Illiteracy (% of population age f5+) Gross primary enrollment (% of school-age population)
Male Female
KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982
2o
lo
o .,o -20
GDP (US$ billions) Gross domestic investmenUGDP Exports of goods and services/GDP Gross domestic savingdGDP Gross national savingslGDP
Current account balance/GDP Interest payments/GDP Total debUGDP Total debt service/exports Present value of debffGDP Present value of debffexporis
10.3 8.8
(average annual growth) GDP GDP per capita Exports of goods and services
-GDI 1 0 ’ G D P
4.8 30.8 27.4 11.9 18.8
-11.9 1.4
55.1
-3.3 2.5 -2.1 1.0 -4.2 2.2 -0.3 6.0
-1.4 11.6
1982-92 1992-02
3.9 4.6 2.8 3.2 5.6 6.3
2o
10
-”
Sri Lanka
19.0 850 16.1
1.4 2.2
25 23 74 16 33 77 8
106 107 104
1992
9.7 24.3 31.7 15.0 18.6
-5.7 1.4
66.7 12.3
2001
-1.5 -2.9 -5.3
9.3 -11.5 -17.5 1.7
South Asia
1,401 460 640
1 .a 2.3
28 63 71
84 44 97
108 89
2001
15.7 22.0 37.3 15.8 20.3
-1.5 1.3
55.0 10.1 43.9 92.9
2002
4.0 2.7 5.6
- 2 0 1
Exports *Imports -
Lower- middle- income
2,411 1,390 3,352
1 .o 1.2
49 69 30 11 81 13
111 111 110
2002
16.6 21 .o 36.2 14.6 19.9
-1.6 1.3
57.9 9.4
200206
5.5 4.4 7.9
Development diamond‘
Life expectancy
T
GNI
capita per
1 Access to improved water source
-Sri Lanka Lower-middle-income WUD
Economic ratios.
Trade
T
1
Indebtedness
-Sri Lanka __ Lowermiddleincome orouo
STRUCTURE of the ECONOMY
(% of GDP) Agriculture Industry
Services
Private consumption General government consumption Imports of goods and services
Manufacturing
(average annual growth) Agriculture Industry
Services
Private consumption General government consumption Gross domestic investment Imports of goods and services
Manufacturing
1982 1992
26.4 25.9 26.3 25.6 14.4 15.3 47.3 48.5
79.8 75.4 8.3 9.6
46.3 41.0
1982-92 199242
1.7 1.7 5.1 5.7 6.8 6.4 4.2 5.3
3.1 4.7 5.1 9.2 0.3 4.5 2.8 7.3
2o01 2o02 1 Growth of investment and GDP ( O h ) I
2o02 1 Growth of exports and imports (%) 1
Note: 2002 data are preliminary estimates * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will
be incomplete.
90
Sri Lanka
PRICES and GOVERNMENT FINANCE
Domestic prices I% change) Consumer prices Implicit GDP deflator
Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surplusldeficit
TRADE
(US$ millions) Total exports (fob)
Tea Other agricultural goods Manufactures
Total imports (cifl Food Fuel and energy Capital goods
Export price index (1995=10@) Import price index (1995=100) Terms of trade (7995=1@0)
BALANCE of PAYMENTS
(US$ millions) Exports of goods and services Imports of goods and services Resource balance
Net income Net current transfers
Current account balance
Financing items (net) Changes in net reserves
Memo: Reserves including gold (US$ miUions) Conversion rate (DEC, /oca//US$)
EXTERNAL DEBT and RESOURCE FLOWS
(US$ millions) Total debt outstanding and disbursed
IBRD IDA
Total debt service IBRD IDA
Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity
World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers
1982
12.1
-14.0
1982
1982
2,185
-94 426
-568
521 47
20.8
1982
2,625 32
179
245 4 3
171 175 22 1 64 0
126 60 4
56 3
53
1992
11.4 9.4
22.1 1 .o
-5.4
1992
2,459 340 164
1,214 3,676
524 175 851
1992
3,081 3,976 -695
-1 78 523
-550
897 -347
936 43.8
1992
6,475 65
1,095
453 15 14
122
-37 121 26
1 88
39 74 14 60 14 46
2001
14.2 13.7
17.0 -4.5
-10.4
2001
4,817 690 330
2,543 5,974
654 731
1,081
169 130 130
2001
6,172 7,154 -982
-267 1,006
-244
464 -220
1,181 89.4
2001
8,658 a
1,570
748 5
39
198 174 61
172 -1 1
37 39 31 8
13 -5
2002
9.6 8.3
16.9 -3.9 -8.5
2002
4,699 660 31 9
2,424 6,106
696 789
1,170
173 135 128
2002
5,967 7,103
-1,136
-252 1,123
-264
602 -338
1,566 95.7
2002
9,592 4
1,734
688 5
44
55 179 -56 235 25
75 91 36 55 13 42
Inflation (%) I20 T
I ~ -GDP deflator -CPI
I Export and import levels (US$ mill.)
I 96 97 98 99 w 01
Exports .ImpOItS
1 Current account balance to GDP ( O h )
Composition of 2002 debt (US$ mill.)
G:496 A:4
A - IBRD E - Bilateral B - IDA D - Other multilateral F - Private C - IMF G - Short-term
Development Economics 8/29/03
91